Examining how elderly employment is associated with institutional disincentives in Japan |
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| Affiliation: | 1. Institute of Economic Research, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo 186-8603, Japan;2. JICA Ogata Sadako Research Institute for Peace and Development, 10-5, Ichigaya Honmuracho, Shinjuku-ku, Tokyo 162-8433, Japan;3. Graduate School of Social Sciences, Chiba University, 1-33 Yayoi-cho Inage-ku, Chiba, Chiba 263-8522, Japan;1. The South East Asian Central Banks (SEACEN) Research and Training Centre, Kuala Lumpur, Malaysia;2. Centre for Applied Macroeconomic Analysis (CAMA), Australian National University (ANU), Canberra, Australia;1. The University of Tokyo, Japan TCER, Japan;2. Hitotsubashi University, Japan TCER, Japan;1. College of Economics, Aoyama Gakuin University, 4-4-25, Shibuya, Shibuya-ku, Tokyo, 150-8566, Japan;2. Department of Economics, Gakushuin University, Tokyo 171-0031, Japan;3. Faculty of Economics, Hitotsubashi University, Tokyo 186-8601, Japan;4. University of Niigata Prefecture, Niigata 950-8680, Japan;1. Institute of Economic Research, Hitotsubashi University, Tokyo, Japan;2. Faculty of Economics, Gakushuin University, Tokyo, Japan;3. Faculty of Economics, Seoul National University, Seoul, Korea;4. Korea Productivity Center, Seoul, Korea |
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| 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. |
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