Reform of the Canada Pension Plan: Analytical Considerations

Author/Editor:

Charles Frederick Kramer ; Yutong Li

Publication Date:

October 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Like other transfer programs, a pay-as-you-go public pension system can significantly affect economic behavior and, hence, relative prices and macroeconomic aggregates. This paper illustrates some of these effects, which are important in weighing options for reforming public pensions, in the context of a stylized model of the Canadian economy. It shows that introducing such a system can reduce aggregate saving, income, and wages and increase interest rates. It also shows that a significant part of the distortion can occur because benefits are not explicitly linked to contributions and that creating a linkage can reduce the distortions associated with the wage tax that funds plan contributions.

Series:

Working Paper No. 1997/141

Subject:

Aging Income Labor National accounts Pensions Population and demographics Retirement Wages

English

Publication Date:

October 1, 1997

ISBN/ISSN:

9781451928327/1018-5941

Stock No:

WPIEA1411997

Pages:

30

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