Projects

Pensions and Transfers in a Dynamic Overlapping Generations Model of a Small Open Ageing Economy

doc. Ing. Tomáš Domonkos, PhD.

Members of project
Ing. Štefan Domonkos, PhD., doc. Ing. Tomáš Domonkos, PhD., Matej Jando, Ing. Miroslava Jánošová, PhD., doc. Mgr. Igor Melicherčík, PhD., doc. JUDr. Ing. Ján Šebo, PhD., Ing. Boris Vaňo

• Basic informations
• Characteristics

• Duration of the project: 07/2024 - 06/2028
  ID number: APVV-23-0125

• Slovakia belongs to the group of European countries facing severe ageing of their population. This adverse development in the share of the working-age population led to the perception that the Slovak public Pay-As-You- Go pension system might not be sustainable in the future. Alongside the increasing pressure on public finances, aging can affect the economic development and welfare throughout other channels as well. It may lead to capital deepening which can be accompanied by increasing capital to labor ratio, decreasing returns on assets, and increasing wages. Aging in developed countries is accompanied by decreasing fertility rate, often far below replacement level. Considering the well-known quantity-quality tradeoff of children originating in the influential work of Becker (1960), a smaller number of children within households can be accompanied by increasing investments in their human capital. Thus, even if the number of workers is smaller, their higher productivity mitigates the negative welfare impacts of aging. Our aim is an in-depth analysis and modelling the impact of ageing on the sustainability of the Slovak pension and transfer system. By doing so, we assume encourage the general discussion about the intergeneration fairness and sustainability of the Slovak pension system. For addressing the main aim and the hypotheses we aim to develop a dynamic large-scale overlapping generations (OLG) model with heterogeneous agents, realistic demography, three-pillar pension system and other private and public transfers. The motivation is to expand the tools used to evaluate the effects of ageing on the Slovak economy with respect to various alternative settings of the pension and transfer system including t axation rules as well. The model will enrich the already well recognized OLG frameworks by including the second pillar, child - related pension benefits as well as bequests. Thus, it has the potential to enrich the theoretical foundations of dynamic OLG models.