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Examining how elderly employment is associated with institutional disincentives in Japan

Author

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  • Oshio, Takashi
  • Shimizutani, Satoshi
  • Oishi, Akiko S.

Abstract

This study examines how the decisions of the elderly with respect to work, retirement, and hours to work relate to the public pension and other relevant programs by constructing a single index of implicit tax that incorporates various factors related to institutional disincentives to working in Japan. Our regression model underscores that public pension and other related programs, taken together, discourage the elderly from working. Based on the regression results, we conduct simulations to show the extent to which the three policy reforms can encourage the elderly to stay in the labor force longer and work longer hours: (1) abolishing the earnings test for pension benefits; (2) raising the eligibility age for pension benefits; and (3) extending the wage subsidy for the elderly. The simulation results highlight the relative effectiveness of raising the eligibility age.

Suggested Citation

  • Oshio, Takashi & Shimizutani, Satoshi & Oishi, Akiko S., 2020. "Examining how elderly employment is associated with institutional disincentives in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:jjieco:v:56:y:2020:i:c:s0889158320300150
    DOI: 10.1016/j.jjie.2020.101078
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    More about this item

    Keywords

    Elderly; Employment; Public pension; Retirement; Implicit tax on continued work;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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