Review of Pension Schemes Under Segmented and Asymmetric Labor Market

This paper analyses the pension system in Turkey using Computable General Equilibrium (CGE) and Overlapping Generations Models (OLG). The objective of the paper is to evaluate the effects of current pension policies on the macroeconomic aggregates when a segmented and asymmetric labor market is considered. We introduced a composite factor of capital and non-qualified labor and a qualified labor factor to define the production process. We further supposed that there is an unemployment risk for the non-qualified agents as in the Fodha at all.(2003). Ultimately, this model aims to compute the transition path of a life cycle economy with multiple OLG, in order to analyze and compare the implications of different pension policies on macroeconomic aggregates. A similar analysis has already been done by Sayan and Kenc (1999) for the Turkish case. However, the effects of the segmented labor market was not taken into account. In this paper, simulations under different pension policy parameters show that segmented and asymmetric labor market hypotheses help identify how the decisions of the different agents and the unemployment rates vary according to the pension policy chosen