The Economics of Social Security in Japan
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The Economics of Social Security in Japan

Edited by Toshiaki Tachibanaki

This book provides a comprehensive appraisal of social security in Japan, where traditionally the burden of welfare provision has been the main responsibility of the family and employers, rather than the state. However, an ageing population, changes in family structure and continued recession has led to an urgent reappraisal of this situation.
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Chapter 2: Social security reform in Japan in the twenty-first century

Toshiaki Tachibanaki


2. Social security reform in Japan in the twenty-first century Toshiaki Tachibanaki 1. INTRODUCTION One of the most serious social and economic problems facing Japan in the twenty-first century is the ageing trend in the age–population structure. In particular, it has a serious effect on the social security systems for pensions, medical insurance, old-age caring, growth rate of the economy and so on. The purpose of this chapter is to examine the pension program that supports a comfortable standard of living for the aged. The ageing trend is likely to reduce the pension benefit level if the current pay-as-you-go system is retained without any modification. This author believes that it is important not to reduce the benefit level because the public pension benefit is the major source of income for the aged. By maintaining the present benefit level, the elderly will not have to face uncertainty and anxiety concerning their standard of living. The chapter presents two major policy reforms to support this assertion. The first is to switch the public pension system from the current pay-as-you-go method to the tax financing method at least for the basic part of the benefit, and the second is to allow firms to withdraw from welfare provision programs. 2. CHARACTERISTICS OF WELFARE PROVISION IN JAPAN IN COMPARATIVE PERSPECTIVE 2.1. Japan Is Not a Welfare State Japan has never been a welfare state, according to various criteria of welfare provision. The United States and...

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