Abstract:

Under the background of the growing population aging, the government put forward the policy goal of gradually delaying the statutory retirement age. This paper uses the overlap generation model to analyze the impact of the delayed retirement age reform on the labors' decision-making behavior. The study shows that, firstly, although the delayed retirement age reform increases the replacement rate of pension, it reduces the lifetime welfare of labors which is mainly due to the reduced consumption of workers in adulthood. Secondly, under the delayed retirement age reform, labors will spend more time in educating their children. The reduced contribution rate of pension will not only help improve their children's human capital but also help to prolong working years. Finally, the heterogeneity of laborers' number of children, life expectancy, leisure preference of retirement, and the degree of caring for children will affect decision-making behaviors of labors. In this regard, the flexible retirement system should be introduced in the delayed retirement reform in the future, while reducing the proportion of pension insurance contributions as a supporting policy, clarifying the responsibility of governments at all levels to subsidize pension insurance funds, accelerating the improvement of state-owned capital to enrich the social security fund system, and improve the multi-pillar old-age insurance system.

Key words: flexible retirement reform, children's human capital, the aged labor supply, endowment insurance