Comparison Between a Closed and an Open Economy with NDC Pension Scheme and Imperfect Labor Market

Wang (2018) elucidates the relationship between NDC pension and fertility in a two-period OLG model of a small open economy with an imperfect labor market. What if the analysis is conducted in a closed economy? This study demonstrates an economic comparison between a closed and open economy with NDC pension scheme and unemployment due to efficiency wage by building up a similar model in a closed economy and compares the welfare between two scenarios. The results show that the small open economy displays much higher welfare compared to the closed one, no matter whether the NDC account rate is endogenous or exogenous