Impact of changes in the funding composition of Japan’s National Pension on intergenerational inequality: an agent-based approach

Abstract

Because of a declining birth rate and an aging population, intergenerational inequality in the public pension system has become one of the most serious social issues, especially in Japan. This paper examines whether it is possible to address intergenerational inequality while maintaining the current pay-as-you-go system in Japan’s National Pension scheme. The study employs agent-based modeling simulation to investigate two settings related to financial resources: (i) changes in the ratio of insurance premiums to taxes, and (ii) the ratio of consumption tax to income tax.