Simulating Public Pension Reforms in an Aging Japan: Welfare Analysis with LSRA Transfers

Okamoto Akira
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Okamoto Akira: Okayama University

Public Policy Review, 2013, vol. 9, issue 4, 597-632

Abstract: This paper explores the effect 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 paper considers two alternative cases: first, the financing of the basic pension benefit by a consumption tax, and second, the elimination of the earningsrelated pension benefit. To distinguish potential efficiency gains or losses from possibly offsetting changes in the welfare of different generations, the paper introduces the Lump Sum Redistribution Authority (LSRA). The simulation results suggest that although consumption tax financing of only a basic pension increases economic output by inducing capital formation, even with LSRA transfers it may not bring about a Pareto improvement.

Keywords: Aging population; Pension reform; Consumption tax; Pareto improvement; Simulation analysis (search for similar items in EconPapers)
JEL-codes: C68 H30 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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