Social Security Reforms and Labour Force Participation of the Elderly in Japan

In the present study we examine how social security programs have affected the labour force participation of the elderly over the past 40 years in Japan. Using publicly available data, we construct incentive measures for inducing retirement, to ascertain actual changes in the generosity of the programs and to explore the impact of the reforms on the labour supply of the elderly. We show that the labour force participation of the elderly is significantly sensitive to the measures, and our counter-historical simulations show that social security reforms since 1985 featuring reduced generosity have significantly encouraged the elderly to remain in the labour force longer.