Okayama Economic Review
Published by the Economic Association of Okayama University

Online ISSN 2433-4146
Print ISSN 0386-3069

Welfare Analysis of Progressive Expenditure Taxation in Japan

岡本 章 Okayama University
島 俊彦 University of Tokyo
This paper aims to establish guidelines for public pension reform in an aging Japan, using a numerical simulation approach. The paper examines the effects of demographic change and public pension policies on economic growth and welfare, using a dynamic life-cycle general equilibrium model. It deals with the benchmark case with the current Japanese pension schedule based on the 2004 reform, and the reform cases in which the whole basic pension benefit is financed by a consumption tax and in which the earnings-related pension is abolished. Moreover, it handles the case in which a progressive expenditure (or consumption) tax is introduced. The simulation results show that the level of economic welfare is higher under these reforms than under the current pension schedule.
Aging population
Public pension reform
Basic pension
Progressive expenditure tax
Life-cycle general equilibrium simulation model
論説 (Article)