Okayama Economic Review
Published by the Economic Association of Okayama University

Online ISSN 2433-4146
Print ISSN 0386-3069


岡本 章 岡山大学
This paper examines the effects of changes in the variance of income distribution on both capital accumulation and social welfare in Japan, the society with an aging population. To analyze the problem, we adopt a simulation approach for an extended life-cycle general equilibrium model of overlapping generations with continuous income distribution. The simulation results indicate that the changes in the variance affect economic variables under a progressive tax scheme but they do not under a proportional tax scheme. The results also show that social welfare greatly increases as the variance shrinks. Therefore, the recent shift in Japan, where the taxation system has tended in effect to become flat, may cause a significant damage to social welfare.
論説 (Article)