Gender, Aging and the Sustainability of Social Security

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This grant has been used to support my on going research on aging and government policy. Japan is undergoing the most rapid demographic changes of any advanced economy. My research has documented that the combined effects of lower fertility rates, aging of the baby-boom generation and lower mortality rates on the future course of the national saving rate. We have found that the recent decline in the national saving rate from 15 percent in 1990 to 6 percent in 2000 is not a transient. Our model projections indicate that the national saving rate will average less than 5 percent for the remainder of the century. In other research I have investigated the implications of demographic change for government policy. Interesting we find that the medical expenditures associated with aging in. Japan will continue to be moderate. Containing social security expenditures is a much bigger and complicated challenge. Retaining benefits at their current level for the young can only be achieved if the consumption tax rate is increased to about 16 percent, a level that is common in Europe but very high relative to the current consumption tax rate of 5 percent.There are many remaining questions that I hope to pursue in future research on this same topic. In the models that we have considered to date, the retirement decision is exogenous. We are now working on making that decision endogenous. This will allow us to investigate how recent changes in social security law will affect the retirement decision. We are also interested in modeling joint labor supply decisions of married households and investigating how changes in the income tax and social security laws will affect participation and labor supply of married women.