On Financing Retirement, Health, and Long-Term Care in Japan
45 Pages Posted: 14 Jan 2019
Date Written: November 2018
Abstract
Japan faces the problem of how to finance retirement, health, and long-term care expenditures as the population ages. This paper analyzes the impact of policy options intended to address this problem by employing a dynamic general equilibriumoverlapping generations model, specifically parameterized to match both the macroeconomic and microeconomic level data of Japan. We find that financing the costs of aging through gradual increases in the consumption tax rate delivers a bettermacroeconomic performance and higher welfare for most individuals than other financing options, including those of raising social security contributions, debtfinancing, and a uniform increase in health and long-term care copayments.
Keywords: Public expenditures and health, Health care spending, Retirement, Health care, Taxation, Aging, Social security, General equilibrium models, Social Security and Public Pensions, Health Insurance, Public and Private
JEL Classification: H51, H55, I13, E62
Suggested Citation: Suggested Citation