Pareto-improving pension reform through technological implementation

We present a standard OLG model where a pension reform promotes the adoption of a new technology by lowering the interest rates that discount the future profit gains. This then leads to a rise in total factor productivity, which, for some parameter values, renders the reform Pareto‐improving. The analysis adds to the existing literature, concluding that a supply‐side response is necessary for any such improvement, and presents a rise in total factor productivity as another possible mechanism.