Research On The Effect About Income Distribution Of The Aged

Nowadays, all developed countries already turned into the old-age society. Many developing countries are turning or will turn into the old-age society. China turned into the old-age society in 1999. The aged in China are more than those in other countries. And 20 percent of the aged in the world are in China. China will be an old-age society in the 21st century. Under the background of the aging, the effect about income distribution of the aged is striking. But the channel through which the aged get income is various. There is no doubt that different channels bring about different effects. Viewed as a whole, the aged regarded as the consumers will bring about great effects on social reproduction.The fundamental theory on the effect about income distribution of the aged. Marxism theory about security of the aged not only discuss that the income of the aged is a portion of value made by surplus labor, also show that the security of the aged is the basic condition of social reproduction. And the government undertakes the principal responsibility in management and practice of the security of the aged. The main-streak economic theory about security of the aged developed from Keynesianism to Neo-Classic School too. The former theory emphasize that we should realize the security of the aged through the tax, and take the security of the aged as Built-in stabilizers of financial policy. But the latter emphasizes that we should raise funds for the security of the aged through market. In order to concretely study the effect about income distribution of the aged, I probe the significance of the aged. The labor ability of a person ordinarily strengthens in the first instance, then will unceasingly weaken, finally vanish. When a person cannot provide labor with time passing, he or she becomes an old person in economics which is called for short the economic aged. A group composed of the economic aged is called for short economic elderly population. The channel through which the aged get income is indirect. Usually the aged get income and obtain consumer goods through transference from one generation to another. When concretely studying the effect about income distribution of the aged, we rest on the ultimate result in society and economy; accord with beneficial result of politics, society and economy; and depend on a series of indexes. We should evaluate the effects scientifically, systematically and objectively. In the procedure of evaluation of the effect about income distribution of the aged, first of all, we should analyze the characteristic of the channal through which the aged gain income; secondly, ascertain the foundation of Evaluation; finally, concretely analyze the effect of gaining income from different channals.The effect about income distribution of basic endowment insurance. The model of raise funds in basic endowment insurance can be distributed into three types:PAYG(pay-as-you-go),Fully Funded and Partially Funded. Basic endowment insurance can result in distribution between the aged in the same generation through Transfer Payment which can dispose resources properly. The representative of income distribution between generations is PAYG. If every generation can tranfer as a rule, the social welfare can be added, Pareto efficiency can be best. Because PAYG makes a beforehand promise of an old-age pension, the demand of accumulate pension and individual savings decrease. It is not evident that what effect Fully Funded have on individual savings. But it transforms the displacement between individual savings and social promise in PAYG into the displacement between forced savings and willing savings in Fully Funded. So, it reduces the proportion of promise, then reduces the proportion of expenditure for the aged. The effect on capital accumulation made by basic endowment insurance principally depends on the designed model. For example, in the simple Model for Lifecycle Saving Behaviors, with PAYG being added, the capital accumulation will reduce because the present consumption adds. So literature which used Model for Lifecycle Saving Behaviors or Overlapping Generation Model all manifested that Fully Funded is more advantageous to capital accumulation and economic growth than PAYG. At the same time, the system of basic endowment insurance also bring about Moral Hazard.The effect about income distribution of employer annuity. Employer annuity which is regarded as a supplement to basic endowment insurance, can influence the income distribution of the aged, and has different effects on governmental finance, an enterprise and the aged. As usual, it can increase Tax Expenditure, improve efficiency, promote social development. In industrialized society, the aged face the risk of economic security. So the aged need a sort of welfare project that be independent of family to attain economic security, and need a sort of substitute for social capital. Employer annuity is one of the substitutes which improve economic security for the aged. The capital market has a function to transfer the long-term fund from a place with surplus fund to other place that is short of fund. During the fund tranferring, social savings is transferring into long-term investment, which is significant for the whole economic development.The development of employer annuity will give an impetus to the capital market. In addition to the effect on whole economy and finance, employer annuity also has effects on enterprises and residents in microcosmic aspect. It can improve financial strength and the value of enterprises, add human capital, establish the figure of enterprises, strengthen the capability of competition and innovation, improve the efficiency of labor. For workers and staff members, it can lighten the burden of taxi, improve the living standard, cultivate self-support sense and reduce shortsighted behaviors.The effect about income distribution of Family-Provide for the Aged. Family-Provide for the Aged is a mainstay of security of the aged, which is related to traditional culture. As a Informal Constraints, Family-Provide for the Aged have the function of income distribution. Under this system , the younger generation provide money or directly provide consumer goods to the older generation in a family, which is based on the wealth that the aged remained to the later generation before. Family-Provide for the Aged is an exchange behavior in the essence. Because the scale of family is limited, the capacity of dispersing risks is restricted. The aged face more risks of shortage of wealth in a family. It is possible that the aged cannot get fees for livings or consumer goods. At the same time, Family-Provide for the Aged is related to curture in security of the aged. However,the efficiency of culture depends on the restraint of morality and the public opinion. When the younger generation in a family breach the restraint of morality, the aged will lose the security of living. The Moral Hazard is a main defect of Family-Provide for the Aged. When social security of the aged cannot be popularized, Family-Provide for the Aged can make up the deficiency of it in the rural area. It can reduce the burden of governmental finance. Besides, Family-Provide for the Aged is good for experience to be passed down between generations. It is also advantageous to combine providing and caring for the aged with spiritual comfort, with the result that the aged get security, and bring about good effect on society and economy.The effect about income distribution of the personal-saving-based old-age-care. The personal-saving-based old-age-care is a significant channel to get income, and it is a mainstay of security of the aged too. This channel has a series of effects on society and economy.The analysis on the rural area in Sunan shows that: firstly, only personal-saving-based old-age-care cannot guarantee the aged against poverty; secondly, people begin to save earlier, the standard of lowest income is lower, and the risk in security of the aged is less; thirdly, not all people can depend on this system to enjoy a life in retirement, but It can reduce the pressure of living for residents; fourthly, its capacity of security for the aged is influenced by fund multiplication and saving behavior. To improve the capability of fund multiplication can add the saving total amount, then easily meet the need of living fees for retirement. Because individual ability to invest is limited and the channel to invest is simplex, it is difficult to accumulate fund through personal-saving-based old-age-care. We should establish a kind of social system to protect the aged in order to allow them to enjoy the social achievements. Personal-saving-based old-age-care can remit the strain about the security of the aged for the government and society to a certain extent. At the same time, this system is good for capital accumulation and capital market.But it can result in abnormality of labor market, and its effects about income distribution is not great.The social reproduction effect about income distribution of the aged. When the aged gain their income through different channels, they normally use the income to consume. Through researching on the extended social reproduction model added to the consumption of the aged, I draw a conclusion:the consumption of the aged has a great effect upon social reproduction. Only when the old-age pension used to consume every year is equal to the reserve fund extracted by the laborer,can social reproduction be successfully actualized. PAYG fits in with the condition. When the old-age pension used to consume is greater than the reserve fund extracted by the laborer, social reproduction cannot be successfully actualized.The present consumer goods are insufficient. By expanding foreign trade or adding reserve supplies, we can get out of the predicament. The government should create unhindered import circumstances for consumer goods and strengthen the capacity of reserving consumption material.Except for PAYG, other social security systems fit in with the condition, when the level of the aging is beyond a certain percent. When the old-age pension used to consume is smaller than the reserve fund extracted by the laborer, social reproduction cannot be successfully actualized too. Some goods in"No.2 sector"cannot be sold smoothly. That the"No.2 sector"export some consumer goods can get out of the predicament. The government should create fine international trade circumstances of international trade for exportation of consumer goods. Except for PAYG, other social security systems fit in with the condition, when the level of the aging is under a certain percent.Main conclusions and suggestions.From the paper,we can get following conclusions: firstly, it is essential to probe the significance of the aged in economics; secondly,we should regard the aging in new viewpoint; thirdly, the income of the aged comes from their labor in the past; fourthly, the channel through which the aged get income is indirect;fifthly ,different channel through which the aged get income has different effects; sixthly, the social reproduction effect about income distribution of the aged is remarkable.So I have some suggestions, such as eradicating the idea of burden about the aged, establishing harmonious relationship between generations, using new idea to solve the problem about the aging, establishing the system about security of the aged in many gradations, overcoming the bad effects of different channels, positively cultivating foreign economical relations,and adding reserve of consumer goods.The following four creations are reflected in the paper:1. I attempt to break through the former understanding about the aged and the aging, and to thoroughly analyze it with a point of view in economics, then to reveal the shortcomings and drawbacks in the former understanding. In according to these findings, I begin to wirte my paper.2. Systematically analyze and research the effects about income distribution of the aged, and make up the blank of this research in system. Respectively analyze and research the different effects made by different channles of income distribution of the aged. At last, clarify present one-sided views on the effects about income distribution of the aged.3. At the basis of Marxist social reproduction theory, research on the extended social reproduction models added consumption of the aged, in order to find what effects the consumption of the aged has on the social reproduction. At present, this research is in a blank . So, I provide a new angle to analyze and research the effects about income distribution of the aged.4. Systematically make suggestions about how to establish a perfect system about security of the aged, give new ideas to solve problems about the aging, bring forward ways to overcome the bad effects in income distribution of the aged. We should eradicate the idea of burden about the aged, establish harmonious relationship between generations, establish the system about security of the aged in many gradations, positively cultivating foreign economical relations, and adding reserve of consumer goods.