Economics Of China's Urban Pension System Transition Costs

The tenet of this thesis, is study on transition cost of China's pension system, which transformed from Pay-as-you-go (PAYGO system) system to Partial Funded System (PF) in 1997, which post great challenge for Chinese government, enterprises and active workers.Economists disagree with each other on which system (PAYGO vs. FF, i.e. Fully Funded system) can has Pareto efficiency .The debate started since 1970s, and several theories sprang out. The first part of this thesis, therefore, is survey on literatures of this field. It is helpful for following study in this thesis.A model is set up to analysis transition cost (or Implicit Pension Debt, IPD) for China's pension system transition, which is inescapable in Chile-style pension reform. Influence factors and their sensibility are studied that in this thesis. Based on this, how transition determines activities of government, enterprises, and active workers are studied, by employing OLG model.Transition from PAYGO system to FF/PF system centers international pension reform. Since 1981, international pension reforms provide some modes: Chile-model (World Bank brought its "3 pillar" solution based on this), Notional Defined Contribution (NDC) model. Survey on international pension reform is helpful reference for transition cost amortization in China. And the survey is more profound than current study.Based on the analysis, some solutions of transition cost amortization are discussed .Some literatures gave wrong conclusion based on wrong assumptions of situation in China.At last, conclusion of this thesis is incentive deficiency, pension account immobility, low coverage must be changed.