Using Indonesia, a country in which 80% of the labour force works in the informal sector, and which confronts a 5-fold increase in the 65+ share of the population this century, as our exemplar economy, we assess, both separately and in combination, the impact of increasing the pension access age for formal labour and introducing a flat-rate social pension for informal labour. [...] is then calculated (calibrated) to target the old-age dependency ratio of 10.56% in 2015-20 (i.e., ratio of the population aged 65+ to the population aged 20-64).31 As for the household heterogeneity, the model targets the (average) intra-generational shares (by employment-skill type) (denoted by state s in the model description), derived from the IFLS 2000-2014. [...] The model also incorporates technological progress via the 30Note that the model comes with the calibration database, which includes the spreadsheets with (and the description of) all the data used in calibrating the benchmark model (and in Section 5, incorporating the demographic transition). [...] The results for the period 2025 (2021-25) provide the impact e§ects (in the first period of the announcement of the reform or t = 1 in the model), while the e§ects for 2145 approximate the long run steady state e§ects. [...] As for the parameterization of the disregard and the taper rate, they are calibrated, in the no ageing environment, to target the distribution of the elderly population based on social pension payments, (similar to the Australian age pension example) with about 25% not receiving any benefit, 45% receiving the maximum benefit, and remaining 30% paid a reduced benefit.
- Pages
- 60
- Published in
- Australia
