Sustainability of Social Security in the Aging Economy from the Perspective of Improving Health

Tomoaki Kotera
Additional contact information
Tomoaki Kotera: Economist, Institute for Monetary and Economic Studies, Bank of Japan (currently, Assistant Professor, Graduate School of Economics and Management, Tohoku University, E-mail: tomoaki.kotera.b1@tohoku.ac.jp)

No 20-E-12, IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan

Abstract: An aging economy is widely believed to increase the recipients of Social Security and thus increase the fiscal burden. However, since the health condition of the elderly today is better than before and may continue to improve in the future, the number of elderly workers may increase. This paper studies the quantitative role of old workers in the sustainability of Social Security in an aging economy by developing a computable overlapping generations model with heterogeneous agents in a general equilibrium framework. The distinctive feature of the model is the incorporation of health status linked to survival probability, medical expenditures, and disutility of labor. The model simulation shows that old workers play a significant role in mitigating the fiscal cost and the effect remains pronounced when Social Security reform is implemented. It also highlights the crucial role of the projected future health status of the population in quantifying the fiscal cost.

Keywords: Elderly Workers; Health; Social Security Reform; Benefit Claim; Overlapping Generations (search for similar items in EconPapers)
JEL-codes: H55 I13 J22 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-hea, nep-ias and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.imes.boj.or.jp/research/papers/english/20-E-12.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ime:imedps:20-e-12

Access Statistics for this paper

More papers in IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan Contact information at EDIRC.
Bibliographic data for series maintained by Kinken (imes.journals-info@boj.or.jp).