Selection Of Social Security System Based On Social Utility

As the pressure of population aging and fiscal payment crisis,governments are eager to change social security system,from pay-as-you-go to partial accumulation system.The change leads to a decades-long argument in the academic circles.But there is no conclusion now.This paper examines the effects of two different systems on saving,economic growth,personal utility and social utility,using overlapping generation model.Then I set model parameters according to economic and social development in China,simulate the real economy in different operating environments and observe changes of social utility. The conclusion is:First,in a society with individual differences,pay-as-you-go affects social utility through its redistribution function and effects on social saving and economic growth.Two conflict influences forms the eventual result.Accumulation system makes no difference on redistribution and economic growth.Generally speaking,partial accumulation system is the best choice for the society.Second,the greater the inequality of pre-tax income is,the higher the optimal contribution rate is.Third,the faster economic growth is,the higher the optimal contribution rate should be.So based on China's actual conditions,keeping the social security standard at the ratio of 28%,government may reduce saving rate in the individual account to fund the "empty account"。Enormous gap between city and country and between different provinces in economic development and inequality of income determines our country should not take a unified social security system.The less developing provinces and countries are more suitable for accumulation system,which is transferable.