Old age consumption and pension policy in a two-tier developing economy

Paddison, Olivier;Pestieau, Pierre
(2001)

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  • Paddison, Olivier
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  • Pestieau, PierreUCLouvain
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Abstract
In a number of developing countries, an important part of the economy is informal both in terms of production and of social protection. In this paper we consider introducing a universal pension system in the formal sector. It is shown to have two main effects: first, it makes the formal sector more attractive to migration and second, it affects capital accumulation in a way which depends on the type of social security introduced, PAYG or funded, and its induced effect on private saving.
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Paddison, O., & Pestieau, P. (2001). Old age consumption and pension policy in a two-tier developing economy (CORE Discussion Papers 2001/45). https://hdl.handle.net/2078.5/77150