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Aging, Inadequacy and Fiscal Constraint: The Case of Thailand

Author

Listed:
  • Phitawat Poonpolkul
  • Ponpoje Porapakkarm
  • Nada Wasi
Abstract
We use an overlapping generations model to study the challenge in developing countries with a large informal sector and aging populations. We use Thailand as a case study and incorporate its labor market structure and its public pension system into the calibrated model. Unlike developed countries, workers in developing countries commonly transit from the formal sector to the informal sector, which can be in the early stage of their working life. This labor market feature crucially limits the coverage of the contributory social security system. We find that 66% of Thai elderly (aged 60 years old or over) are ineligible for social security annuity benefits because of an insufficient number of years paying into the social security fund. In addition, we use our model to evaluate two schemes to raise the existing universal basic pension income to the poverty line; namely, uniform benefits and pension-tested benefits. We find that pension-testing effectively improves the targeting efficiency, and non-trivially lower the cost of the basic pension income program.

Suggested Citation

  • Phitawat Poonpolkul & Ponpoje Porapakkarm & Nada Wasi, 2022. "Aging, Inadequacy and Fiscal Constraint: The Case of Thailand," PIER Discussion Papers 182, Puey Ungphakorn Institute for Economic Research, revised Mar 2023.
    • Handle: RePEc:pui:dpaper:182
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    References listed on IDEAS

    as
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    Cited by:

    1. Shantanu Bagchi, 2024. "Means testing and Social Security in the United States," International Studies of Economics, John Wiley & Sons, vol. 19(1), pages 68-91, March.

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    More about this item

    Keywords

    Overlapping generations model; Fiscal sustainability; Pension; Social Security; Thailand;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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