A Simulation Study of the Effect of Delayed Retirement on Welfare of the Elderly

Evidence from China

Bibliographic Data

ID3218502
AuthorsZixuan Shen (0000-0001-8178-2419, Zhejiang A & F University), Zheng Shen (0000-0003-2348-5189), James Yang (0000-0002-6179-1673), James G S Yang (Zhongnan University of Economics and Law, corresponding author)
Year2021
Volume11
Issue2
Publication date2021-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSAGE Open (JOURNAL)
Journal identifiersISSN: 2158-2440 • E-ISSN: 2158-2440
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/21582440211016901
OpenAlexW3169092752
LanguageEN
Citations received5
References cited23

In order to cope with population aging and emerging labor shortages, the Chinese government may soon introduce a policy to address this problem by raising the normal retirement age. However, the effects of planning for delayed retirement on the welfare of the elderly remain unknown. From an intergenerational support perspective, we develop a dynamic optimization model that can simulate changes in the welfare of the elderly over the years under different delayed retirement scenarios. Simulation results show that delaying retirement will produce a detrimental effect on old-age welfare. We further analyze strategies to mitigate this adverse effect and improve people's welfare. First, the delayed retirement policy should raise the pension replacement rate, which could transfer part of the social welfare improvements from delayed retirement to the elderly through the transfer payment mechanism. Second, when adopting a defined-contribution pension system, the delayed retirement could increase the welfare of the elderly and the social well-being. Implications for future research and public policies concerning welfare effects of delayed retirement are discussed

China · Demographic economics · Economics · Labour economics · Mandatory retirement · Payment · Pension · Political science · Population · Population ageing · Retirement age · Transfer payment · Welfare · Financial Literacy, Pension, Retirement Analysis · Global Health Care Issues · Medicine · Retirement, Disability, and Employment

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