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

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Abstract

We examine how social security programs have affected the labor force participation (LFP) of the elderly over the past forty years in Japan. Using publicly available data, we construct forwardlooking incentive measures for inducing retirement, to ascertain the actual changes in the generosity of the programs and to explore the impact of the reforms on the labor supply of the elderly. Our regression analysis shows that the LFP of the elderly is significantly sensitive to the measures, and our counter-historical simulations show that since 1985, social security reforms have significantly encouraged the elderly to remain longer in the labor force.

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