Welfare Analysis of Pension Reforms in an Ageing Japan

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Abstract

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.

Original languageEnglish
Pages (from-to)452-483
Number of pages32
JournalJapanese Economic Review
Volume64
Issue number4
DOIs
Publication statusPublished - Dec 1 2013

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ASJC Scopus subject areas

  • Economics and Econometrics

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