Research On Pareto Efficiency Of China's Old-Age Social Insurance System Reform

This paper explores Pareto efficiency of the reform of china's old-age social insurance with a two-period OLG model. The reform is zero sum game and it only affects intergenerational redistribution, if we assume the reform do not influence the output per capita. Therefore, Pareto improvement of this reform depends on the output per capita. Though a series studies of the general equilibrium before and after the reform, we found the output per capita is decided by labor growth rate, the contribute rate of capital to output, the premium rate and the consumption discount rate. There is a positive correlation between capital per capita and output per capita. Therefore, the reform would raise output per capita and bring Pareto improvement, if it increases capital per capita.This paper introduces the backgroud and purpose of this paper and makes a brief review of the literature about the Pareto efficiency of the old-age social insurance reform from and out of the courtry firstly.Then concludes the system evolvement process of china's old-age social insurance, which can divided into three periods, and now china's Id-age social insurance system is turn to partial funded scheme from pay as you go scheme. Exploring Pareto efficiency of the reform of china's old-age social insurance with a two-period OLG model, we found the output per capita is decided by labor growth rate, the contribute rate of capital to output, the premium rate and the consumption discount rate. Evaluating the paremeters of the model, and caculating the result, it could get the couclusion that china's old-age social insurance reform make Pareto improvement.