The Effects of Japanese Social Security Retirement Benefits on Personal Savings and Elderly Labor Force Behavior
Using Japanese annual time series data covering the period from 1946to 1982, this paper shows that social security wealth depresses personal savings. The effect was a reduction of approximately 143 thousand yen per capita wealth in real terms from 1970 to 1980. However, declining labor force participation of the elderly (i.e., earlier retirement), stimulates personal saving by an estimated 12 thousand yen over the same period. The study found that the benefit effect dominates the retirement effect. In addition, this study has identified a negative interdependency between the personal savings and labor retirement behaviors of the elderly; that is, an individual saves more before retirement if he expects to stay a shorter time in the labor market, and vice versa.