Agent-Based Simulation for Pension System in Japan
In this chapter, we carry out computational experiments to examine the Japanese public pension system from the perspective of both the macro and micro levels. In Japan, one of the most aging populations in the world, many studies have been conducted using
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Abstract In this chapter, we carry out computational experiments to examine the Japanese public pension system from the perspective of both the macro and micro levels. In Japan, one of the most aging populations in the world, many studies have been conducted using computational simulations to evaluate the sustainability of the pension system under the condition of drastic demographic change. Although most of those studies including a governmental valuation of the pension system mainly focus on the macro-level outputs of simulations, they pay little attention to individuals in the pension system. In order to obtain the micro data of individuals, we develop an agent-based model for the Japanese public pension system using actual statistical data sets adopted from surveys by the Japanese government. In this chapter, we present the development of our simulation model and discuss the effectiveness of an agent-based approach to examine the pension scheme through our simulation results. Keywords Agent-based simulation • Pension system
1 Introduction The Japanese pension system is basically operated by a “pay-as-you-go” scheme currently. This scheme refers to an unfunded system in which current contributors to the system pay the expenses for the current recipients. Accordingly, a shift in the demographic structure could cause different contribution ratios among generations. Recently, a demographic projection for the coming decades indicates that Japan will experience a rapid increase in the percentage of the elderly in its population.
T. Murata () • Z. Chen Faculty of Informatics, Kansai University, Japan e-mail: [email protected] T. Murata et al. (eds.), Agent-Based Approaches in Economic and Social Complex Systems VII: Post-Proceedings of The AESCS International Workshop 2012, Agent-Based Social Systems 10, DOI 10.1007/978-4-431-54279-7 13, © Springer Japan 2013
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This is expected to generate an inequality between generations and also to threaten the financial sustainability of the public pension system. Moreover, the inequality among different generations and the uncertainty of the public pension system generate distrust in and criticism toward the system’s operation, which result in a declining National Pension payment, thus making pension financing even worse. The Japanese government undertook a drastic pension reform in 2004 for the purpose of restoring the sustainability of, and public trust in, the pension system [1]. In that reform, a number of steps were taken, and it was stipulated by law that the government should carry out actuarial valuations at least every five years to verify the pension finances over a period of around 100 years from the time of valuation. As a matter of fact, population aging is a worldwide issue threatening pension finance in most industrial countries. There have been a number of simulation analyses conducted to verify the sustainability of the pension system under drastic population aging. Boldrin et al. [2] carried out numerical simulati
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