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Aging, Saving, and Public Pensions in Japan

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  • Charles Yuji Horioka
  • Wataru Suzuki
  • Tatsuo Hatta

Abstract

We analyze the impact of population aging on Japan's household saving rate and on its public pension system and the impact of that system on Japan's household saving rate and obtain the following results: first, the age structure of Japan's population can explain the level of, and past and future trends in, its household saving rate; second, the rapid aging of Japan's population is causing Japan's household saving rate to decline and this decline can be expected to continue; third, the pay-as-you-go nature of the public pension system, combined with rapid population aging, created considerable intergenerational inequities and increased the saving rates of cohorts born after 1965, which in turn slowed the decline in Japan's household saving rate; and fourth, the 2004 public pension reform alleviated the intergenerational inequities of Japan's public pension system somewhat but will in the long run exacerbate the downward trend in Japan's household saving rate.

Suggested Citation

  • Charles Yuji Horioka & Wataru Suzuki & Tatsuo Hatta, 2007. "Aging, Saving, and Public Pensions in Japan," ISER Discussion Paper 0692, Institute of Social and Economic Research, Osaka University.
  • Handle: RePEc:dpr:wpaper:0692
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    File URL: http://www.iser.osaka-u.ac.jp/library/dp/2007/DP0692.pdf
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    References listed on IDEAS

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    1. Horioka, Charles Yuji, 1990. "Why is Japan's household saving rate so high? A literature survey," Journal of the Japanese and International Economies, Elsevier, vol. 4(1), pages 49-92, March.
    2. Charles Yuji Horioka, 2002. "Are the Japanese Selfish, Altruistic or Dynastic?," The Japanese Economic Review, Japanese Economic Association, vol. 53(1), pages 26-54.
    3. Charles Yuji Horioka, 2004. "Are the Japanese Unique? An Analysis of Consumption and Saving Behavior in Japan," ISER Discussion Paper 0606, Institute of Social and Economic Research, Osaka University.
    4. Charles Yuji Horioka, 2000. "A Cointegration Analysis of the Impact of the Age Structure of the Population on the Household Saving Rate in Japan," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 511-516, August.
    5. Horioka, Charles Yuji, 1992. "Future trends in Japan's saving rate and the implications thereof for Japan's external imbalance," Japan and the World Economy, Elsevier, vol. 3(4), pages 307-330, April.
    6. Charles Yuji Horioka, 2006. "Do the Elderly Dissave in Japan?," Chapters,in: Long-run Growth and Short-run Stabilization, chapter 5 Edward Elgar Publishing.
    7. Sato, Ryuzo & Negishi, Takashi (ed.), 1989. "Developments in Japanese Economics," Elsevier Monographs, Elsevier, edition 1, number 9780126198454.
    8. Horioka, C.Y., 1989. "The Determinants Of Japan'S Saving Rate: The Impact Of The Age Structure Of The Population And Other Factors," ISER Discussion Paper 0189, Institute of Social and Economic Research, Osaka University.
    9. Gertler, Mark, 1999. "Government debt and social security in a life-cycle economy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 61-110, June.
    10. Tomoki Kitamura & Kunio Nakashima & Masaharu Usuki, 2006. "Risk Analysis of Pension Reserve Investment with Macro Economy Indexation under the 2004 Public Pension Reform (in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 178, pages 3-30, November.
    11. Kilponen, Juha & Kinnunen, Helvi & Ripatti, Antti, 2006. "Population ageing in a small open economy : some policy experiments with a tractable general equilibrium model," Research Discussion Papers 28/2006, Bank of Finland.
    12. Charlet Yuji Horioka, 2002. ""Are the Japanese Selfish, Altruistic, or Dynastic?" (in Japanese)," CIRJE J-Series CIRJE-J-70, CIRJE, Faculty of Economics, University of Tokyo.
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    Citations

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    Cited by:

    1. Michael Graff & Kam-Ki Tang & Jie Zhang, "undated". "Demography, Financial Openness, National Savings and External Balance," MRG Discussion Paper Series 2008, School of Economics, University of Queensland, Australia.
    2. Tsunao Okumura & Emiko Usui, 2014. "The effect of pension reform on pension-benefit expectations and savings decisions in Japan," Applied Economics, Taylor & Francis Journals, vol. 46(14), pages 1677-1691, May.
    3. Horioka, Charles Yuji, 2010. "The (dis)saving behavior of the aged in Japan," Japan and the World Economy, Elsevier, vol. 22(3), pages 151-158, August.
    4. Bommier, Antoine, 2009. "Mortality Decline and Aggregate Wealth Accumulation," TSE Working Papers 09-050, Toulouse School of Economics (TSE).
    5. Brender,Anton & Pisani, Florence & Gagna, Emile, 2012. "The Sovereign Debt Crisis: Placing a curb on growth," CEPS Papers 6951, Centre for European Policy Studies.
    6. Charles Yuji Horioka, 2010. "Aging And Saving In Asia," Pacific Economic Review, Wiley Blackwell, vol. 15(1), pages 46-55, February.
    7. Lans, Cheryl, 2012. "A shrinking population offers opportunities for a sustainable Japan," MPRA Paper 61991, University Library of Munich, Germany.
    8. Noriyuki TAKAYAMA & Yukinobu KITAMURA, 2009. "How to Make the Japanese Public Pension System Reliable and Workable," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 97-116.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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