Lifetime income and public pension

Income Redistribution Effect Of Public Pensions Between Dynastic Families

“…It is emphasized, however, that the positive effect is not achieved for αF1 when the proportional part is increased. This is in direct contrast to the proposition by Creedy (1980Creedy ( , 1996 and Shimono and Tachibanaki (1985) that a funded scheme of public pensions always has a positive redistribution effect, and implies a clear distinction between a funded scheme and a pay-as-you-go scheme. Moreover, even when the positive redistribution effect is observed in the case for αH1, some households with below-average income may receive a negative income transfer, depending upon the values of α and T.…”

“…Although the actual public pension system of Japan has maximum limits for both contributions and benefits (see Shimono and Tachibanaki, 1985), these limits are ignored in this paper to simplify the analysis. The introduction of these limits would produce weaker income redistribution effects than those presented here, but would not affect the qualitative results.…”

“…For studies on intragenerational income transfer in the public pension system, it has been most common to employ the framework based on the life cycle hypothesis; in particular, the transfer of lifetime income has been investigated by Creedy (1980Creedy ( , 1996, Shimono and Tachibanaki (1985), Nelissen (1987), Wolfson (1988), and Kennedy (1990) among others. While it is not our current objective to discuss the validity of specific behavioral models, lifetime income transfers within a generation would not measure the social security transfers appropriately when each generation is altruistically linked as in Barro (1974).…”

Social Security and the Intragenerational Redistribution of Lifetime Income in Japan*

“…In Japan, by contrast, it is very difficult to make a lifetime-income-based analysis of intragenerational redistribution, because, unlike in the United States, adequate panel data are unavailable. On the basis of a numerical analysis of a two-period life-cycle model, Shimono and Tachibanaki (1985) determined the extent to which state pension programmes redistribute lifetime income in Japan. They showed that a flat component of the pension benefits reduces the inequity of lifetime income, and that an increase in a wageproportional premium rate contributes to a reduction in income inequality.…”

“…The numerical analysis byShimono and Tachibanaki (1985) pointed out that removing the cap has a limited impact on income redistribution in Japan. Meanwhile,Coronado et al (2000) showed that in the United States this type of reform makes the system less progressive.12 This reform was actually implemented in April 2003.…”