Major Common Themes: 2004

III. Public Debt and Economics of Ageing

Integrated Approach to Public Debt, Pensions and Health

III-A How can Japan sustain its huge public debt?

1. The Optimum National Tax-and-Social-Insurance Burden

Leading Fellow(s)

Overview

In Japan some have argued that the combined burden of taxes and social insurance premiums should be held to 50% or less, but there appears to be little basis for this position. There are countries with a tax burden as high as 70% that are thriving economically, while one can find countries with a burden in the vicinity of 30% whose economies are stagnating. Although taxes and social insurance premiums impose a burden, they also provide benefits to the nation. Keeping these benefits in mind, this study will examine whether it is necessary for Japan to hold the burden to no more than 50% by determining the optimum tax-and-social-insurance burden for Japan. This will be done by simulation analysis using a simulation model.

The findings should make an important contribution by providing the basis for an examination not only of the pension system but of the entire social insurance system in the years ahead, including health care and long-term care.

Major Research Results

  • Continuing project: Research underway

III-B Holistic approach to social security issues: economics of ageing

1. Studies on Social Security

Leading Fellow(s)

Major Research Results

  • Continuing project: Research underway

III-C Searching for ideal pension systems

1. Social Security Research Project: "Toward an Economics of Population Aging"!Y

Leading Fellow(s)

Overview

In Japan there are rising concerns that the old-age dependency ratio (the ratio of the elderly to the working-age population) will continue to soar, and the ratio of pension outlays to GDP (dependence on the working-age population) will balloon, with the result that the economic pie will cease to expand and ultimately social security itself will cease to function. For this reason, an overhaul of the pension system and the social security system as a whole has become unavoidable.

This research project will seek to clarify the basic issues surrounding social security from a wide-ranging, long-term, and theoretical perspective, and to establish an overall "Economics of Population Aging."

The immediate goals are to provide a theoretical understanding from which to address certain key issues and to conduct simulation analyses using a macroeconomic model that explicitly incorporates a social security system. The issues are
(1) requirements of a desirable pension system, including (a) optimum level of benefits, (b) creation of a mechanism for ensuring parity of contributions and benefits for each individual (actuarial fairness), and (c) the trade-off between the contribution rate and benefits rate;
(2) the net indebtedness inevitably generated in a public pension system;
(3) a public pension system compatible with the goal of sustaining economic growth as much as possible;
(4) the possibility of applying the NDC formula (for determining actuarial fairness under a pay-as-you-go pension system) to Japan.

III-D What social security systems would minimize disincentives in labor market?

1. A Study of Labor Mobility

Leading Fellow(s)

Overview

The relationship between labor and business in Japan is changing. The relationship that supported social stability and economic efficiency until now - one based on guarantees and obligations - is shifting to one centered on individual responsibility and choice. As this occurs, the need has arisen for an "external labor market" outside the corporation that functions effectively in the allocation of labor resources as part of the social infrastructure supporting individual choice. At present, however, the external labor market does not perform this function adequately, with the result that unemployment stemming from a mismatch between demand and available resources is on the rise. To ensure that the external labor market functions properly, it is necessary not only to create employment opportunities but also to put in place systems for job placement and human resource development.

This study will undertake a statistical analysis using micro data in an effort to facilitate labor mobility by improving the functioning of the external labor market. Using international comparisons of Japan, the United States, and Europe, as well as case studies, it will identify problems in job creation and placement as well as human resource development in Japan and will consider measures for improving the situation.

Major Research Results

RIETI Discussion Papers

2. Research on Employment of the Elderly

Leading Fellow(s)

Major Research Results

  • Continuing project: Research underway

3. Measures for Better Utilizing Women in a Gender-Equal Society

Leading Fellow(s)

Overview

Governments have implemented a variety of public policies designed to create women-friendly work environments and to take better advantage of women's skills and abilities, but in Japan these efforts have made little headway.

This study will analyze the problem from the premise that certain fundamental issues may have been neglected. It will shed light on various circumstances, including the school education of Japanese girls, career tracks in Japanese corporations, the uncooperative attitudes of men, the heavy responsibility mothers bear with regard to children's education, and difficulty of adopting certain public policies from women's perspectives, using empirical interdisciplinary research involving the fields of sociology and education, as well as economics.

Major Research Results

RIETI Policy Symposium

4. An Industrial Policy for Sports

Leading Fellow(s)

Overview

This project will examine the development of the concept of sports from a historical perspective and attempt to show that, within the modern paradigm, sports provides something that answers a social need (defined as social performance).

Next, it will attempt to determine, given the special characteristics of sports as an industry, what would most benefit Japan in the coming years. In the process, it will consider economic value, an especially important aspect of social performance, and the possibilities for industrialization and marketization. It will examine the hypothesis that "the sports industry has high potential within the tertiary sector and is an important industry for Japan."

It will then evaluate what sort of industrial policy Japan has and should have vis-a-vis the sports industry, and offer some tentative conclusions in the form of concrete policy proposals.

Major Research Results

RIETI Column

  • The True Nature of the Dispute over the Realignment of Japan's Professional Baseball Industry

Publication

  • Management of Soccer's J. League