China's Pension System Reform On Economic Growth

Pay as you go system has faced challenge in the world trend of Ageing of the population; many countries in the world begin looking for better old-age insurance system. The success change of privatization of the pension insurance system 1980s in Chile set off a wave of reform. China started a pension system reform in 1984, after a dozen years of exploration, in 1997 the State Council promulgated the "on the establishment of a unified enterprise workers of the basic endowment insurance system for decision" unified national pension insurance system, and in the subsequent years further improve it. Nevertheless, there are still some questions that are resolved difficult during the endowment insurance system reform in China. Main: 1, personal accounts run empty;2, transition costs irreparable; 3, the old-age insurance fund to support not touch, there are many gaps; 4, preserving and increasing the value of Pension Fund difficulties, and so on. In this context, many scholars have done in-depth studies on the old-age insurance system and policies. There are many excellent results published, but most of them are management areas, the purpose of the study is to seek the optimization improvement of endowment insurance system. Although the quantitative research of the effect that the change of Chinese endowment insurance contributes to economic growth from the economics perspective is under less, there are also a lot of academics do meaningful works. Scholars at home and abroad mainly through two ideas study this effect: one is that we can use saving as a intermediate variables to inspect the effect of pay as you go and fully fund to the saving, so that we can analyze the affect of saving to economic growth. The other is that we can study it based on the "golden ratio" theory of economic growth. This theory thinks that economic growth has nothing to do with the savings, and associated with the return rate on capital. If the return rate on capital equal to the sum of the population growth rate plus labor productivity growth rate, that is "Biological return rate, "economic growth will be in the optimal path. The development of a country's economy can influence the design of the endowment insurance system, similarly, a State old-age insurance system changes will have an impact on the country's economy, and they are inextricably linked. Therefore, study on the effect of the endowment insurance system reform to the economic not only has theory and practical significance to the social security system, but also has practical significance to maintaining the sustainable development of China's economy.This paper attempts to establish a two-period dynamic life mode under the economic growth theory and general equilibrium frame to study the effect Chinese old-age insurance system reform to the economic growth from both theoretical and empirical aspects. Firstly, though reviewed the economic growth theory, we draw that the increase of unit labor capital is to promote economic growth, and different settings of the pension insurance system will change the capital of unit labor. Secondly, we build three modes and solve the unit labor capital of pay as you go system, partial fund system (not taking into account the transition costs)and partial fund system (taking into account the transition costs).Based on this, we can draw the relevant economic variables. These are unit labor output, capital - output ratio, the prices of production factors, old age and youth workers consumption, and so on. Finally, we value the parameters under the present situation of China and use Mathematic5.0 to calculate them. The results showed that: unit labor capital of partial fund system (not taking into account the transition costs) is bigger, unit labor capital of partial fund system (taking into account the transition costs) is smaller and unit labor capital of pay as you go system is in the Intermediate, while unit labor capital and the growth of a country's economy are highly relevant. Concluded: 1,China's old-age insurance system is currently not suitable to change to the fully fund system; 2,because of transition costs, the partial fund system that we operate restrain economic growth; 3,if transition costs can be absorbed, partial fund system (not taking into account the transition costs) has positive effect to economic growth. By analyzing we obtained corresponding policy recommendations: 1,personal accounts dose not need to be changed from "empty account" to the "actual accounts"; 2,it is a pressing task to digest the transition costs, the Government, as the pension's ultimate responsibility, should bear due responsibility; 3,raising labor productivity, optimize the capital.