TY - JOUR
T1 - Welfare Analysis of Pension Reforms in an Ageing Japan
AU - Okamoto, Akira
N1 - Funding Information:
An earlier version of this paper was presented at the 64th Congress of the International Institute of Public Finance in the Netherlands in August 2008. I am grateful for the insightful comments and suggestions of Professors Alan J. Auerbach (University of California, Berkeley), Ronald D. Lee (University of California, Berkeley), Ronald Wendner (University of Graz), Lei Zhang (Tsinghua University), Pietro Rizza (Banca d’Italia), Toshihiro Ihori (The University of Tokyo) and Masumi Kawade (Nihon University). In particular, Professor Tomoyuki Nakajima (Kyoto University) kindly offered many useful comments, and Mr Toshihiko Shima helped me by writing the computer program used for the simulations. I also wish to express my appreciation to the Editor of this journal, Professor Kazuo Mino (Kyoto University), and to the two anonymous referees, for providing extremely valuable and detailed comments. In addition, I want to thank Professor R. Anton Braun (Federal Reserve Bank of Atlanta) for his kind permission to use data from Braun et al. (2005). Finally, I also wish to acknowledge the financial support of the Ministry of Education, Culture, Sports, Science and Technology in Japan (Grant-in-Aid for Scientific Research (C) no. 23530370).
PY - 2013/12
Y1 - 2013/12
N2 - This paper uses a computable general equilibrium model with overlapping generations to explore the effects of different public pension schemes on economic welfare, and intergenerational and intragenerational equity. Besides the benchmark case based on the 2004 public pension reform, the present paper considers two alternative reforms: financing the basic pension benefit through a consumption tax, and eliminating the earnings-related pension benefit. The simulation results suggest that even the consumption-tax financing of only the basic pension, namely, the combination of both reforms, might not improve overall economic welfare, although it increases economic output by inducing capital formation.
AB - This paper uses a computable general equilibrium model with overlapping generations to explore the effects of different public pension schemes on economic welfare, and intergenerational and intragenerational equity. Besides the benchmark case based on the 2004 public pension reform, the present paper considers two alternative reforms: financing the basic pension benefit through a consumption tax, and eliminating the earnings-related pension benefit. The simulation results suggest that even the consumption-tax financing of only the basic pension, namely, the combination of both reforms, might not improve overall economic welfare, although it increases economic output by inducing capital formation.
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U2 - 10.1111/jere.12002
DO - 10.1111/jere.12002
M3 - Article
AN - SCOPUS:84886750810
SN - 1352-4739
VL - 64
SP - 452
EP - 483
JO - Japanese Economic Review
JF - Japanese Economic Review
IS - 4
ER -