Spousal Tax Deduction, Social Security System and the Labor Supply of Japanese Married Women

Toshihiro Ihori (ihori@e.u-tokyo.ac.jp), Ryuta Kato, Masumi Kawade (kawade.masumi@nihon-u.ac.jp) and Shun-ichiro Bessho
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Toshihiro Ihori: University of Tokyo, http://www.u-tokyo.ac.jp/

No EMS_2009_15, Working Papers from Research Institute, International University of Japan

Abstract: This paper evaluates one of the most drastic reforms of the Japanese public health insurance started in year 2006, by numerically examining the reform in an aging Japan in a dynamic context with overlapping generations within a computable general equilibrium framework. Our simulation results are as follows. First of all, an increase in the co-payment rate, which is one of the most prominent changes in the reform, would result in higher economic growth as well as higher welfare since it stimulates private savings. Secondly, an increasing trend of the future national medical expenditure can mainly be explained by an aging population, and an increase in the co-payment rate has little effect to squeeze the national medical expenditure in the future. Thirdly, the effect of a decrease in the national medical expenditure, which can possibly be induced by the improvement in efficiency in the public provision of medical services, the promotion of preventative medical services, or technological progress in the medical field, on the future burdens of medical expenditures is very small. Finally, if the government implements a policy to keep the ratio of the national medical expenditure to GDP constant, then the government has to keep reducing the national medical expenditure over time, and the reduction rate should be 45 percent in year 2050. Such a policy also eventuates in lower economic growth until around year 2035. Our simulation results thus indicate that the reform is not so effective to reduce the future national medical expenditure, but it can achieve higher economic growth by stimulating private savings.

Keywords: Health Insurance; Japan; National medical expenditure; Economic growth; Aging population (search for similar items in EconPapers)
JEL-codes: C68 D58 E17 E62 H51 H55 H62 I18 O40 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2009-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Spousal Tax Deduction, Social Security System and the Labor Supply of Japanese Married Women (2009)
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