IDEAS home Printed from https://ideas.repec.org/p/kgu/wpaper/209.html
   My bibliography  Save this paper

Long-term care insurance effects on Japan fs regional economy: an approach linking theoretical with empirical analysis

Author

Listed:
  • Ryoji Hasegawa

    (Fukuyama City University)

  • Masaya Yasuoka

    (Kwansei Gakuin University)

Abstract

Long-term care insurance plays an important role in Japan, where dual problems of an aging population and low birthrate have continued. Such insurance affects the macro-economy through many mechanisms, with both negative and positive influences. Although increased taxes and insurance premiums from long-term care decrease consumption, decreasing precautionary saving eventually increases consumption because of decreased risks of long-term care and mitigation of self-payment for people receiving long-term care services. Furthermore, effects on household consumption by the aging population and low birthrate are expected to differ among regional economies. This study, particularly addressing insurance effects on household consumption and the regional economy, develops a theoretical model for household consumption and assesses numerical examples of macroeconomic effects using parameters that are consistent with data for Japan. Furthermore, using a multi-regional input?output (MRIO) table at the prefectural level in Japan, we examine long-term care insurance effects on household consumption and economic ripple effects occurring regionally and nationally. The results reveal differences in insurance effects by region and by household generation. Gross Domestic Product (GDP), representing total economic activity, rises. Gross Regional Product (GRP) can also be pulled up. However, because of a difference in the degrees of increase in GRP in the respective regions, GRP inequality can be magnified. Specifically considering these results, we assess relations between regional economic disparities and improvements in long-term care insurance.

Suggested Citation

  • Ryoji Hasegawa & Masaya Yasuoka, 2020. "Long-term care insurance effects on Japan fs regional economy: an approach linking theoretical with empirical analysis," Discussion Paper Series 209, School of Economics, Kwansei Gakuin University.
    • Handle: RePEc:kgu:wpaper:209
    as

    Download full text from publisher

    File URL: http://192.218.163.163/RePEc/pdf/kgdp209.pdf
    File Function: First version, 2020
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hemmi, Noriyoshi & Tabata, Ken & Futagami, Koichi, 2007. "The long-term care problem, precautionary saving, and economic growth," Journal of Macroeconomics, Elsevier, vol. 29(1), pages 60-74, March.
    2. Picone, Gabriel & Uribe, Martin & Mark Wilson, R., 1998. "The effect of uncertainty on the demand for medical care, health capital and wealth," Journal of Health Economics, Elsevier, vol. 17(2), pages 171-185, April.
    3. Mizushima, Atsue, 2009. "Intergenerational transfers of time and public long-term care with an aging population," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 572-581, December.
    4. Ryoji Hasegawa & Shigemi Kagawa & Makiko Tsukui, 2015. "Carbon footprint analysis through constructing a multi-region input–output table: a case study of Japan," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-20, December.
    5. Hayne E. Leland, 1968. "Saving and Uncertainty: The Precautionary Demand for Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 465-473.
    6. Masaya Yasuoka, 2019. "Elderly care service in an aging society," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(1), pages 18-34, January.
    7. Caballero, Ricardo J, 1991. "Earnings Uncertainty and Aggregate Wealth Accumulation," American Economic Review, American Economic Association, vol. 81(4), pages 859-871, September.
    8. Liljas, Bengt, 1998. "The demand for health with uncertainty and insurance," Journal of Health Economics, Elsevier, vol. 17(2), pages 153-170, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Masaya Yasuoka, 2019. "Elderly Labor and Precautionary Saving," Discussion Paper Series 193, School of Economics, Kwansei Gakuin University.
    2. Nocetti Diego & Smith William T, 2010. "Uncertainty, the Demand for Health Care, and Precautionary Saving," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-31, August.
    3. Miao, Jianjun & Wang, Neng, 2007. "Investment, consumption, and hedging under incomplete markets," Journal of Financial Economics, Elsevier, vol. 86(3), pages 608-642, December.
    4. Hubbard, R. Glenn & Skinner, Jonathan & Zeldes, Stephen P., 1994. "The importance of precautionary motives in explaining individual and aggregate saving," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 59-125, June.
    5. Mark Huggett, 2004. "Precautionary Wealth Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 769-781.
    6. Conor O'Toole & Kieran McQuinn & Philip Economides, 2021. "Household savings constraints, uncertainty and macroprudential policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(2), pages 238-260, May.
    7. Ariizumi, Hideki, 2008. "Effect of public long-term care insurance on consumption, medical care demand, and welfare," Journal of Health Economics, Elsevier, vol. 27(6), pages 1423-1435, December.
    8. Hauenschild, Nils & Stahlecker, Peter, 2001. "Precautionary saving and fuzzy information," Economics Letters, Elsevier, vol. 70(1), pages 107-114, January.
    9. Chou, Shin-Yi & Liu, Jin-Tan & Hammitt, James K., 2003. "National Health Insurance and precautionary saving: evidence from Taiwan," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1873-1894, September.
    10. Robert Rosenman, 2011. "The public finance of healthy behavior," Public Choice, Springer, vol. 147(1), pages 173-188, April.
    11. Bolin, Kristian & Lindgren, Björn, 2014. "Non-monotonic health behaviours - implications for individual health-related behaviour in a demand-for-health framework," Working Papers in Economics 588, University of Gothenburg, Department of Economics.
    12. Alba Lugilde & Roberto Bande & Dolores Riveiro, 2018. "Precautionary saving in Spain during the great recession: evidence from a panel of uncertainty indicators," Review of Economics of the Household, Springer, vol. 16(4), pages 1151-1179, December.
    13. Huggett, Mark & Ospina, Sandra, 2001. "Aggregate precautionary savings: when is the third derivative irrelevant?," Journal of Monetary Economics, Elsevier, vol. 48(2), pages 373-396, October.
    14. Huggett, Mark & Vidon, Edouard, 2002. "Precautionary wealth accumulation: a positive third derivative is not enough," Economics Letters, Elsevier, vol. 76(3), pages 323-329, August.
    15. Kim, Yun-Yeong, 2021. "Composite-asset-risk approach to solving the equity premium puzzle," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 200-216.
    16. Hui Chen & Jianjun Miao & Neng Wang, 2010. "Entrepreneurial Finance and Nondiversifiable Risk," The Review of Financial Studies, Society for Financial Studies, vol. 23(12), pages 4348-4388, December.
    17. Bolin, Kristian & Caputo, Michael R., 2020. "Consumption and investment demand when health evolves stochastically," Journal of Economic Dynamics and Control, Elsevier, vol. 114(C).
    18. Ashoka Mody & Franziska Ohnsorge & Damiano Sandri, 2012. "Precautionary Savings in the Great Recession," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 60(1), pages 114-138, April.
    19. Harris, Matthew & Kohn, Jennifer, 2015. "Reference dependent utility from health and the demand for medical care," MPRA Paper 61926, University Library of Munich, Germany.
    20. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December.

    More about this item

    Keywords

    Elderly care subsidy; Household consumption; Multi-regional Input?Output (MRIO) table; Precautionary saving;
    All these keywords.

    JEL classification:

    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:209. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Toshihiro Okada (email available below). General contact details of provider: https://edirc.repec.org/data/dekgujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.