Labor Market Implications of Pension Reform: Analyzing Delayed Retirement Policies and Fiscal Adjustments in Aging Economies

Tiantian Dai, Hua Fan, and Shenyi Jiang   Published : May 2025   JEL Code: E24, H55, J26, J64   URL to this Article: http://aeconf.com/Articles/May2025/aef260104.pdf

Abstract

This paper employs a labor search model with two different skill-intensive markets to examine how pension systems and fiscal policies influence the young and the old unemployment rates in an aging population. In general, adjust ments to the meeting rates, statutory contribution rates, and fiscal policies exert ambiguous effects on the labor market, and spillover effects arise as f irms cannot discriminate based on age when hiring. The paper calibrates the model using Chinese data to quantify the impact of retirement policy reforms during the first decade of the 21st century, and it highlights each influencing channel using the counterfactual experiments.

Keywords

Aging; Pension reform; Unemployment rates; Labor search.