Abstract
This chapter presents construction of a simple overlapping generations model (OLG model) that includes multiplicate regions or nursing care probability. Using it, we analyze how social security policies affect regional agglomeration or dispersion. The declining fertility and the progress of aging in Japan present the most severe situation in the world. Therefore, it is extremely important, even urgent, for countries facing declining fertility and aging society to adopt policies to overcome such issues. We analyze the effect of central government’s social security policy on the population distribution between regions. Results show that per-capita capital accumulation at the steady state depends in this model on a tradeoff among saving effects, migration effects, and fertility effects.
This is a preview of subscription content, log in via an institution to check access.
Notes
- 1.
(See Source): Ministry of Internal Affairs and Communications Bureau of Statistics Homepage “National census 2010.”
- 2.
(Source): Ministry of Health, Labour, and Welfare Homepage “Survey on Long-Term Care Insurance 2010.”
- 3.
We assume that each region has a private pension system. Consequently, the total savings of households in region i at period t are redistributed to households to survive during the retirement period.
- 4.
Here we specify (12.21) as the production function, in which production technology in region u differs from that in region r. Although the wage rate in region r is constant irrespective of capital accumulation, the wage increases because of capital accumulation. However, the increase of additional residential cost in region u decreases the relative wage between them.
- 5.
Differentiating (12.14) with respect to η, \(\frac{\partial s_{t}^{u{\ast}}} {\partial \eta } = -A(1-\tau )(1-\sigma )^{1-\alpha }(1-\alpha )^{2}\eta ^{\alpha -2}k^{\alpha } <0\). Moreover, differentiating η with respect to δ, \(\frac{\partial \eta } {\partial \delta } = - \frac{\gamma p} {\left \{p(1-\gamma +q_{t})\right \}} \cdot \frac{\partial q_{t}} {\partial \delta } <0\). Consequently, \(\frac{\partial s_{t}^{u{\ast}}} {\partial \delta } = \frac{\partial s_{t}^{u{\ast}}} {\partial \eta } \cdot \frac{\partial \eta } {\partial \delta }> 0\). Therefore, we know that the saving effect is positive. As for the effect of δ on m t, which is the fertility effect, differentiating m t with respect to δ, \(\frac{\partial m_{t}} {\partial \delta } = - \frac{\gamma (1-\sigma )} {\left \{p(1-\gamma +q_{t})\right \}^{2}} \cdot \left \{\frac{\partial z_{t}} {\partial \delta } [\gamma (1 - p) + p(1 + q_{t})] + pz_{t}\frac{\partial q_{t}} {\partial \delta } \right \} \lesseqgtr 0\). Consequently, the sign of \(\frac{\partial m_{t}} {\partial \delta }\) is also ambiguous because there are two effects of δ on m t. One is a positive effect, in which the increase in δ decreases the child care cost z t. Decreasing z t increases a household’s incentive to have children. However, the other is a negative effect, in which the increase in δ increases the nursing care probability q t. Consequently, its effect decreases incentives to have children by increasing saving for the retirement generation.
References
Diamond, P.A. 1965. National debt in a neoclassical growth model. The American Economic Review 55: 1126–1150.
Naito, T., and T. Omori. 2014. Can urban pollution shrink rural districts? Letters in Spatial and Resources Science 7(2): 73–83.
Omori, T. 2009. Effects of public education and social security on fertility. Journal of Population Economics 22(3): 585–601.
Sato, Y. 2007. Economic geography, fertility and migration. Journal of Urban Economics 61(2): 372–387.
Yakita, A. 2001. Uncertain lifetime, fertility and social security. Journal of Population Economics 14(4): 635–640.
Yakita, S. 2011. Regional public goods, migration, and growth. Letters in Spatial and Resources Science 4(2): 129–138.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer Nature Singapore Pte Ltd.
About this chapter
Cite this chapter
Naito, T. (2017). Regional Agglomeration and Social Security Policies in OLG Model. In: Naito, T., Lee, W., Ouchida, Y. (eds) Applied Approaches to Societal Institutions and Economics. New Frontiers in Regional Science: Asian Perspectives, vol 18. Springer, Singapore. https://doi.org/10.1007/978-981-10-5663-5_12
Download citation
DOI: https://doi.org/10.1007/978-981-10-5663-5_12
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-5662-8
Online ISBN: 978-981-10-5663-5
eBook Packages: Economics and FinanceEconomics and Finance (R0)