Review of Population and Social Policy, No. 10, 2001, 81–106

The Economic Situation and Income Inequality
among the Older People in Japan:
Measurement by Quasi Public Assistance Standard1
Atsuhiro YAMADA*

Abstract
This article examines the changing economic position of Japaneseolder people during half of the latest economic recession period (1989–1995),
using micro data from the Comprehensive Survey of Living Condition of thePeople on Health and Welfare. The Quasi Public Assistance Standard (QPAS),
which is based on the administrative minimum cost of living standard guaranteedby the Constitution, is applied as a benchmark and an equivalence scale. The
growth of administrative minimum cost of living standard relative to other social
security benefits, consumer price index and wage growth are also examined.
Special attention is also paid to lone-parent households in the context ofcomparison with older households in the analysis.
There are four main findings; (1) Income inequality among older households
is higher among others, although the working income is generally main
contributor for it, reflecting the high labour force participation rate of older
people. (2) However, among single female older households, the main
contributor to inequality is social transfer. (3) The below-QPAS proportion among
single female older households exceeds 10% and is the highest among the older
households, but this number is much lower than that of lone-parent households.
(4) The growth rate of administrative minimum cost of living standard is higher
than that of consumer price index, although lower than wage growth rate on
average, but there are certain differences by household type and residential area.
These findings suggest that how to precisely target on economicallydisadvantaged older households could be a key question for the next pension
reform.

1. Introduction
Based on recent analyses, the traditional image of the economicallydisadvantaged older people has changed.2 However, the Comprehensive Surveyof the Living Conditions of People on Health and Welfare shows that 16% of
older people households3 are living on incomes of below 1 million yen per* Researcher, National Institute of Population and Social Security Research.
1 The views expressed here are those of the author and do not represent the views of any
organisation to which the author belongs.
2 See Takayama and Arita (1996) for a comprehensive study on both the wealth and income ofthe older people.

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Atsuhiro YAMADA

anum. While only 1% of the entire population are beneficiaries of public
assistance (means-tested benefits), 5% of the older people are relying on suchassistance. The income of the older people shows relatively wide diversity,reflecting the accrued human capital investment of the past.4 A certain proportionof the older people is still disadvantaged, in terms of labor force status, wealthstatus and pension benefit level. Raising the pensionable age and lowering future
pension benefit levels would shift some older people over the borderline ofmeans-tested benefit levels and transform them into real beneficiaries of public
assistance. Nonetheless, there are few research studies5 on this topic. How manyolder people are on the borderline, and what are the consequences of economic
recession, in the wake of the bubble economy, on the economic position of theolder people? There would be many disadvantaged older people in terms ofincome flow, even if they are asset-rich because of low interest rates. It isnecessary to have information that answers such questions on a time series basis
for use in designing the future social security system.
This article has three objectives: first, to measure the relative economic positionof the older people using the Quasi Public Assistance Standard (QPAS) based on theadministrative minimum cost of living standard guaranteed by the Constitution;
second, to measure income inequality amongst the older people (to arrive at aconsistent measure, household disposable income is adjusted for household size
and age by QPAS), and; third, to show the decomposition of inequality by income
source. Two new approaches are employed for these purposes: First, when thepeople on the borderline are measured, savings and debt are considered, and;
Second, the indexation of QPAS is also carefully examined,6 and compared withgrowth in wages, prices, and public pension benefits.
For this analysis, I chose to use the Comprehensive Survey of the Living Conditionsof the People on Health and Welfare, although there are several other surveys
that provide suitable data for examining the economic position of the older people
in Japan. For example, the National Survey of Family Income and Expenditure,
3

4

5

6

The definition of an older people household in the survey is “the household is constituted ofonly members aged 65 and over, or of members aged 65 and over with unmarried household
members under age 18.”
See the study by Seike and Yamada (1998) which illustrates a strong relationship between past
career and income or housing wealth diversity among the older people.
Hoshino (1995), Nishizaki et al. (1997), Wada and Kimura (1998), and Economic Planning
Agency (1999) provide recent investigations into the low-income or low-consumption groupand income inequality. Nishizaki et al. (1997) attempts an international comparison, and Wada
and Kimura (1998) investigate the historical trends in people on the borderline.
An application of the public assistance standard (administrative minimum cost of living
standard) would always present problems unless there is some examination of its indexation
against other indexes, such as price index, wage growth rate, growth rate of disposable
income. Otherwise, “Helping more is read as more help being needed (Sen 1983, p. 158).”

The Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard

83

the Family Income and Expenditure Survey, and the Income Redistribution Survey
are frequently used; but, there are substantial differences amongst those surveys
in terms of measuring income distribution.7 Considering this ambiguousness, thepurpose of my research is to identify the trends in the economic situation of theolder people household in a relative context, rather than in an absolute context,
by making comparisons with other household types. I would like to emphasize
this limitation; otherwise my analysis might have misleading policy implications.
In the next section I will discuss the research method taken. In section 3, I will
explain the specific method of calculation that generates the QPAS used as anequivalence scale. Those who are not interested in the technical discussion canskip to section 4. In section 4, I provide an empirical overview of the economic
position of older people by income resource and detailed household type, using
QPAS. Some implications for future reforms will be discussed in the last section.

2. Method and Data
2.1. Quasi Public Assistance Standard (QPAS) as an Equivalence Scale

In this analysis, I utilize the public assistance standard8 as an equivalence scale
and as a benchmark to identify low-income people. I will explain how to
calculate this standard in concrete terms in the following section, although I
would like to emphasize that there is some difference between the real standard,
which is the administrative minimum cost of living standard, and the calculated
standard (QPAS) because of a lack of necessary information. Nevertheless, I
believe that the QPAS is very useful in identifying low-income people for threereasons. First, public assistance is the fundamental safety net of social security inJapan, and therefore my empirical results would have direct policy implications.
Second, the standard is calculated by age, household size, and individual specificneeds, to satisfy the minimum cost of living standard for each household, andtherefore it is de facto an equivalence scale9 and a benchmark. Third, I can makedirect comparisons across different time periods in relative terms, since the

7

8

9

See Matsuura (1996) and Ida (1997). According to Matsuura (1996), the average income is thelowest and Gini coefficient is the highest in all household head age categories based on
calculations from the Comprehensive Survey of the Living Conditions of the People on Healthand Welfare, compared with the National Expenditure Survey and Household Survey.
For those who are not familiar with the public assistance system in Japan, Eardley et al. (1996)
provides an outline of the system in English.
There are many alternative equivalence scales. For a compact survey of different equivalence
scales, see Atkinson et al. (1996, p. 18–21).

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Atsuhiro YAMADA

administrative minimum cost of living standard is indexed by the average growthof expenditure for a typical working household. This indexation is called“Balanced Standard Method.”10 However, since there is some possibility that theindexation will be different for each household type, I will examine thesedifferences in section 3.
There are mainly four components to be considered in the calculation of QPAS:
Residential Category I, which depends on the age of each household member;
Residential Category II, which depends on household size; Both category I and II
have six rates for different residential areas to take account of different consumer
prices in urban and rural area. Premiums, which meet additional needs for specifichousehold types, and; housing assistance. At the same time, relatively small
premiums and assistance are ignored, and some premiums and assistance areimpossible to calculate because of data limitations. Thus, there is some difference
between QPAS and the real administrative minimum cost of living standard.
2.2. Data

I use micro data from the Comprehensive Survey of the Living Conditions of thePeople on Health and Welfare from the years 1989, 1992, and 1995. The
advantage of using this data set is that the survey captures well the low-income
group, including the beneficiaries of means-tested benefits (public assistance),11

10 Because of this method, the expenditure difference between non-beneficiaries and beneficiaries

of public assistance is kept constant. Prior to introduction of this “Balanced Standard Method”
in FY 1984, there were several methods used for indexation of the public assistance standard(administrative cost of living standard) since 1948. Between FY 1948 and FY 1960, “Market
Basket Method” was applied. The minimum cost of living was calculated on the basis ofnecessary goods for livelihood. Since FY 1961, “Inverse Engel’s Coefficient Method” had beenused. The minimum living cost was calculated by the equation; theoretical cost for food anddrink, which provided necessary calories, divided by real Engel’s coefficient of actual lowincome household’s income. Between FY 1965 and FY 1983, the indexation was based on theofficial projection of domestic expenditure growth, and the additional amount was also
considered to abolish the expenditure difference between non-beneficiaries and beneficiaries ofpublic assistance. For a detailed history of public assistance administration and the analyses onminimum living cost, see Konuma (1974) and Soeda (1995).
11 However, I cannot estimate the take-up rate of public assistance precisely, since the survey does
not contain information on inflow and outflow of beneficiaries. The effect of dropping almost
20% of the sample with missing values is unforeseen with respect to the estimation of the takeup rate, as the percentage of beneficiaries is very low. According to the Report on Social Welfare
Administration by the Ministry of Health and Welfare, beneficiaries’ households are 1.4% ofentire households. However, that percentage is 0.8%, according to the Comprehensive Survey on
the Living Conditions of the People on Health and Welfare. Moreover, even though the survey
contains an adequate sample size, it is not large enough to investigate the take-up rate ofspecific household type, such as that of the lone-parent household.

The Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard85

and this satisfies my research purpose to identify people on the borderline.12 In
those years, the survey covered a large sample, and it allows for a detailed
investigation by household category. Moreover, the survey years cover the periodof recession, and therefore I can also investigate the effect of extremely low
interest rates on older people relying on savings.
The survey in large sample years contains three questionnaires: a household
questionnaire, an incomes/savings questionnaire, and a health questionnaire. The
total amount of expenditure is also available from the former questionnaire. I
draw mainly on the incomes/savings questionnaire, but I also use the otherquestionnaires to obtain necessary information. After removing samples withmissing values for income variables and demographic variables, 80% of theoriginal sample is available for the three years.

3. Concrete Calculation Method of Quasi Public AssistanceStandard (QPAS)
3.1. Basic Concept of the Public Assistance Standard

I calculated both Residential Category I and II based on the age of eachhousehold member, household size and the residential area. In addition,
Residential Category II has a seasonal additional amount extended between
November and March. This additional amount also differs according to residential
area. I aggregate these two types of basic amounts, and I also aggregate theseasonal additional amount by 5/12.
In terms of the special needs of each household, I consider the old-age
premium, single parent premium, and the childcare premium. The real public
assistance standard includes the other premiums: maternity premium, disability
premium, at-home patient premium, and radiation disability premium. Of thosepremiums, the amount of the disability premium and the radiation disability
premium is relatively high. However, I ignored those premiums, since I could not
identify whether the household member was disabled, nor could I identify his or
her degree of disability, even using the health questionnaire. I recognize that thismight cause some error.
The old-age premium can be calculated as follows. For household members
aged 70 and over, I simply multiply the amount by the number of qualified

12 In relation to real public assistance beneficiaries’ households, inflow has slightly increased since

FY 1992. Since FY 1993, inflow has exceeded outflow of beneficiaries’ households. For detailed
information, see Ministry of Health and Welfare (1998) for statistics on the trends for beneficiaries.

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Atsuhiro YAMADA

member(s). For household members aged between 68 and 69, I only multiply thepremium amount by the number of persons that need long-term care.13 To be inline with the real public assistance rule applied for doubly qualified premiums, I
also adjust between the old-age premium and lone-parent premium, applying ahigher premium.14 For the childcare premium, I multiply the amount by the
number of children in the household under the age of 3.
There are other types of assistance in addition to benefits in cash, such as
temporary assistance, education assistance, medical assistance, birth assistance,and occupational assistance under the public assistance scheme. However, I do
not consider those forms of assistance because there is limited information in thesurvey data. When calculating QPAS, I could only consider the maximum amountof housing assistance to adjust for people living in owner-occupied dwellingsand people living in rented accommodation. Funeral assistance is also consideredwhen I treat savings, since some savings are in reality allowed for older people.
The amount is equivalent for the funeral assistance. Several benchmarks forconsidering the treatment of savings are described in the next section. In theanalysis, I did not estimate the imputed rent for those people living in an owneroccupied dwelling or the imputed consumption of wealth; therefore, theadjustment for an owner-occupied dwelling and rented accommodation is still
imperfect, even after taking housing assistance into consideration.
3.2. Combination of QPAS and Debt/Savings

I identify persons as below-QPAS by using ten benchmarks that combine
disposable income with debt/savings, or that combine consumption withdebt/savings. I labelled these benchmarks QPAS 1 to 5 for the combination of
disposable income and debt/savings; and QPAS A to E for the combination of
consumption and debt/savings. Originally, the public assistance standard was
designed on the basis of consumption level and, accordingly, it might be more
appropriate for it to be evaluated by expenditure level. Thus, “Below-QPAS A to
E” are calculated.
As the real public assistance standard has a special deduction rule for working
income, this rule is applied for calculating QPAS 1 to 5.
In the questionnaire, the amounts of debt or savings are coded by categoricalchoices. I use the median value of the categorical choice to calculate net
13 This calculation ignores disabled people aged over 65, who are also applicable for the old-age

premium, although, again, disability status is not available in the survey.
14 This method neglects the lone-parent premium provided for lone-parent households with morethan one child. Nevertheless, the maximum amount of the lone-parent premium is not usuallyawarded.

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87

savings. For example, if the categorical choice of savings is “Equal or more than
5 million yen and below 7 million yen,” I simply recoded it as “6 million yen.”
And for the maximum category, such as “More than 30 million yen,” I simply
applied the amount “30 million yen.” Because of this recoding process, theamount of debt/savings is not entirely accurate. Nonetheless, taking the amountof net savings into consideration is one of the advantages of my analysis. The
treatment of debt/savings is often problematic when low-income persons apply
for public assistance.
The next table shows the combination of debt/savings15 with the disposable
income/consumption used by my analysis.
3.3. Three Household Categories

I use three household types for my analysis: a) age category of household head,b) detailed category of older people household, and c) economicallydisadvantaged household (lone-parent household). The definition of “older
people couple household” in my analysis is different from the definition in theoriginal survey. My definition is “a two-member household comprising a maleaged 65 or over and a female aged 60 or over.”
To identify a lone-parent household, I used the following method. First, I
extract household heads, whose marital status is either unmarried, widowed, or
divorced. If the household head is male, I add a condition of between age 18 to
64 for a male household head, and a condition of between age 16 to 59 for afemale household head. In addition to this sampling, I extract households whose
members are all under age 18. In my analysis, I regard this household also as anapplicant for the lone-parent premium. However, the lone-parent household
extracted by this estimation method would exclude some part of real lone-parent
households,16 which are eligible for the real lone-parent premium.
Using those three household categories, I analyse the change in economic
position by the age of household head, the concentration of low-income orincome diversity by specific household type, and the relative economic positionof the older people compared with average households or economicallydisadvantaged households. The composition of these household categories isshown in the appendix.
15 For QPAS 3 and E, I applied the explanation from Tabata (1997) for savings treatment in actual

public assistance administration. However, there is no substantive enactment for this treatment
in public assistance legislation.
16 For example, if the children are disabled, the single parent premium can be applied until thechildren reach age 20. The premium is also applied in the case that an older sibling takes careof a younger sibling and one of the parents is an in-patient, mentally sick, or disabled.

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Atsuhiro YAMADA

Table 1 Quasi public assistance standards
Ten Combination of Disposable Income/Consumption Expenditure with Debt/Savings
QPAS

Evaluated Matters

Treatment of Debt/Savings

1

No Treatment of debt/savings. If the amount of
Disposable Income minus
disposable income is below QPAS, the household is
Deductible Working Income
classified as “below-QPAS 1.”

2

If the amount of disposable income is below QPAS
Disposable Income minus
and if net saving is below zero, the household is
Deductible Working Income
classified as “below-QPAS 2.”

3

If the amount of disposable income is below QPAS,
and if the net saving is below half the amount of QPAS
Disposable Income minus
plus the amount of funeral aid (only for the household,
Deductible Working Income
which includes more than one member aged 65 andolder), the household is classified as “below-QPAS 3.”

4

If the amount of disposable income is below QPAS
Disposable Income minus
and if the gross saving is equal to zero, the household
Deductible Working Income
is classified as “below-QPAS 4.”

5

If the amount of disposable income is below QPAS,
and if the gross saving is below half the amount of
QPAS plus the amount of funeral aid (only for the
Disposable Income minus
Deductible Working Income household, which includes more than one member
aged 65 and older), the household is classified as“below-QPAS 5.”

A

Consumption Expenditure

No Treatment of debt/savings. If the amount ofexpenditure is below QPAS, the household is classified
as “below-QPAS A.”

B

Consumption Expenditure

If the amount of expenditure is below QPAS and if net
saving is below zero, the household is classified as“below-QPAS B.”

C

Consumption Expenditure

If the amount of expenditure is below QPAS, and if the
net saving is below half the amount of QPAS plus theamount of funeral aid (only for the household, which
includes more than one member aged 65 and older),the household is classified as “below-QPAS C.”

D

Consumption Expenditure

If the amount of expenditure is below QPAS and if thegross saving is equal to zero, the household isclassified as “below-QPAS D.”

Consumption Expenditure

If the amount of expenditure is below QPAS, and if thegross saving is below half the amount of QPAS plus
the amount of funeral aid (only for the household,which includes more than one member aged 65 andolder), the household is classified as “below-QPAS E.”

E

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89

4. Empirical Results
4.1. The Economic Position of Older Households in the mid-1990s

Figure 1 shows ten combinations of debt/savings with QPAS by age of household
head. “Below-QPAS 1 to 5” is U-shaped except for those in the 40s age range.
Household heads in the 20s age range and the 60s age range have a highproportion of people below-QPAS. When I considered debt and savings, theproportion of below-QPAS is almost halved.
In comparison to the “Below-QPAS 1” group, which is based on disposable
income, the “Below-QPAS A” group, which is based on consumption, has arelatively higher proportion of members in all age categories.
Past research that attempted to estimate the proportion of older people livingwith income below public assistance level usually ignored their accumulated wealthand debt. Therefore, we do not know how this proportion would vary when taking
into account these factors. It appears that the proportion of older people living withincome/consumption below public assistance level is higher than households
headed by persons aged 30 to 64, even taking accumulated wealth and debt into
consideration. My results are still consistent with the past research.
Now I turn to the next question of how below-QPAS older people are

(%)
55
50
45
40
35
30

All Households
Household Head Age 20–29
30–39
40–49
50–59
60–64
65+

25
20
15
10
5
0
QPAS 1 QPAS 2 QPAS 3 QPAS 4 QPAS 5 QPAS A QPAS B QPAS C QPAS D QPAS E

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People on
Health and Welfare.

Figure 1 Proportion of below-QPAS households by age of household head (1995)

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Atsuhiro YAMADA

concentrated by specific type. Figure 2 shows the proportion of below-QPAS by
detailed type of older people household.
Obviously, many of the single households belong to the below-QPAS income
group. When I ignore the existence of savings (QPAS 1), 40% of the single female
older people household are below QPAS. Using QPAS A, which evaluates theconsumption level regardless of savings, 30% of single female older people
households are below-QPAS. This suggests that this household type is still
economically disadvantaged.
In single households only, the treatment of debt does not alter the result,which probably reflects the fact that few people in these households have debts.
In Figure 2 it is also possible to compare single older people households withlone-parent households. The proportion of below-QPAS among lone-parent
households is much higher than for single female older people households. As
Kido (1985) and Shinozuka (1985) show, lone-parents are still an important target
group in terms of public assistance. The differences between QPAS 2 and 4, 3 and
(%)
55
50
45
40
35
30
25
20
15
10
5
0
QPAS 1 QPAS 2 QPAS 3 QPAS 4 QPAS 5 QPAS A QPAS B QPAS C QPAS D QPAS E
All Households

Older Household Headed by People Age 65+

Single (Male Age 65+)
Single (Female Age 65+)

Older Household Headed by People under Age 65(the Person Age 65+ is a subordinate member)

Couple (Male Age 65+ and Female Age 60+)

Lone Parent

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People on
Health and Welfare.

Figure 2 Proportion of below-QPAS households by detailed older household
type (1995)

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91

5, B and D, or C and E, imply that lone-parents have a certain amount of debt,
and it is crucial for a borderline group of them to treat their savings in net terms.
To summarize my fact-finding in this section, the results indicate that a certain
proportion of older people households still belongs to the borderline income
group with respect to public assistance. However, the economic position of loneparent households is even worse than that of older people household types.
4.2. Trends in the Economic Position of the Older People Household

I now investigate trends in the economic position of older people households. I
pay special attention to QPAS 1 and A, which apply the most relaxed treatmentof savings, and to QPAS 4 and D, which apply the strictest treatment of savings.
The differences of below-QPAS proportions are shown in Table 2. The
proportions of each household type in 1989 are used as benchmarks. As I
mentioned above, there might be a problem concerning a different indexation of

Table 2 Trends of below-QPAS households’ proportion
QPAS 1QPAS 4QPAS AQPAS D’89–’92 ’89–’95 ’89–’92 ’89–’95 ’89–’92 ’89–’95 ’89–’92 ’89–’95
All Households

–1.9

–2.8

–0.3

–1.1

–1.8

–2.9

–0.5

–1.1

Household Head Age 20–29

–0.2

–1.6

0.8

–0.8

–0.8

–0.4

–0.4

–0.6

30–39

–3.7

–4.3

–0.4

–0.4

–1.0

–1.1

–0.2

–0.1

40–49

–1.9

–3.3

–0.3

–1.0

–1.3

–2.2

–0.3

–0.8

50–59

–2.4

–3.3

–0.3

–1.4

–2.7

–3.7

–0.5

–1.2

60–64

–0.6

–1.2

0.0

–1.1

–1.7

–3.1

0.0

–0.2

65+

–3.4

–5.7

–2.3

–3.6

–3.3

–7.2

–2.6

–4.3

Single (Male Age 65+)

–13.6

–15.4

–11.7

–15.2

–9.7

–11.6

–6.8

–11.3

Single (Female Age 65+)

–1.1

–6.5

–4.6

–8.8

–3.6

–11.2

–5.0

–9.9

Couple (Male Age 65+ andFemale Age 60+)

–4.9

–7.7

–1.3

–2.9

–4.2

–7.4

–1.3

–2.6

Older Household Headed
by Age 65+

–2.2

–2.9

–1.3

–0.8

–1.4

–4.3

–2.1

–2.4

Older Household Headed byunder Age 65 (Age 65+ is adependent member)

–4.7

–5.8

–1.0

–1.6

–5.6

–9.6

–0.8

–1.4

Lone Parent

–7.2

–10.5

–3.9

–4.8

–7.9

–10.2

–1.8

–5.5

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People on
Health and Welfare.

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Atsuhiro YAMADAQPAS from each different household type; I will investigate the different
indexation of QPAS for each household type in the next section.
The borderline is getting lower in the later time period across all age groups ofhousehold heads, except for households headed by people from age 20 to 29
and people from age 60 to 64. Among the households headed by those from age
20 to 29, the proportion of below QPAS has increased between 1989 and 1992;
and for the households headed by those aged 60 to 64, there is no difference
among the three periods.
Turning to detailed older people household types, I find that the extent of decline
in the proportion of below-QPAS among older people single households is relatively
large among the other older people household types. In particular, there is a morethan 10% decrease of below-QPAS proportions among single male households and aslightly smaller decrease for single female households. On the other hand,considering the large percentage of below QPAS proportion among lone-parent
households, the extent of the decrease is relatively small, when I take savings into
account for the QPAS benchmark. However, I have to carefully examine the variety
of indexation among different household types, otherwise I misinterpret better
indexation as an increasing proportion of below-QPAS households.
4.3. Trends of Indexation and Average Benefit Level

If the growth of the administrative minimum cost of living standard applied bypublic assistance, which is the basis of QPAS, is lower than growth in wages orthe consumer price index or wage growth, the proportion of below-QPAS
households automatically declines. Under these circumstances, the real value of
QPAS shrinks against the standard cost of living and fewer households would becounted as below-QPAS. On the other hand, with administrative efforts to raise
the minimum cost of living standard faster than growth in wages or the consumer
price index, the number of people below the borderline would increase.
Table 3 allows us to compare the growth of social security benefits, average
disposable income, or administrative minimum cost of living standard against
growth in wages or the consumer price index.
The last two columns show the growth rates in 1992 and 1995 compared with
1989 as 100%. If the growth rates of either social security benefits or disposable
income were lower than the growth rate of the consumer price index or wages,
few would disagree with the conclusion that the benefit level had fallen behind
the growth in national prosperity.17
17 Ideally, it should also take account of the consumption pattern, which is different for eachhousehold type, each income group, and each stage of the lifecycle. In future analysis, I would
like to examine the indexation from this viewpoint.

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Table 3 Growth of social security benefit

Consumer Price Index
Wage GrowthOld-age Pension
National Basic Disability Pension
Pension
Survivor’s Pension
Old-age Pension
Employee’s
Disability Pension
Pension
Survivor’s Pension
Livelihood Aid
Housing Aid
PublicEducation Aid
Assistance
Medical Aid
Older Household
Household Headed by Under Age 29
by Age 30–39
by Age 40–49
Averageby Age 50–59
Disposable
by Age 60–69
Income perby Over Age 65
Household1
by Over Age 70
Lone Parent (Mother)
Lone Parent (Father)
Area Class 1-1
Standard three-member
Area Class 1-2
householdArea Class 2-1(Male age 33, Female age 29, Area Class 2-2
and one child age 4)
Area Class 3-1
Area Class 3-2
Area Class 1-1
Household with older members Area Class 1-2
Area Class 2-1(Male age 63, female age 58,
Area Class 2-2
male age 33, female age 29,
Area Class 3-1
and one child age 4)
Area Class 3-2
Area Class 1-1
Area Class 1-2
Minimum Living
Area Class 2-1
Older
CoupleHousehold
2Standardper Household (Male age 72 and female age 67) Area Class 2-2
Area Class 3-1
Area Class 3-2
Area Class 1-1
Area Class 1-2
Area Class 2-1
Single Older Household
Area Class 2-2(Female age 70)
Area Class 3-1
Area Class 3-2
Area Class 1-1
Area Class 1-2
Lone Parent Household
Area Class 2-1(Female age 37 with
Area Class 2-2
one child age 12)
Area Class 3-1
Area Class 3-2

Average Monthly Benefit (Yen)3
1989
1992
1995
—
—
—
—
—
—
31,10637,29644,656
65,46270,45975,54352,81456,16460,284
137,978
151,667
169,700
90,721
96,835102,542
71,054
77,97584,44539,58946,11451,044
10,995
13,51016,626
6,037
6,484
6,759
84,91095,854
108,104
227,583
254,417
276,833
245,333
277,167
285,417407,500
471,000
493,000
512,583
596,750
627,667
563,000
661,833
724,583
436,500
506,167
539,167
359,417406,333
439,917331,083
371,750
398,083
189,250
207,500
224,167
353,750
416,833
418,333
152,563
166,398
173,867
149,191
159,501
166,627
140,004
152,583
159,391
136,369
145,690
152,151
122,431
133,793
139,915
118,810
126,875
132,665
221,973
241,413
252,440
216,562
231,176
241,697
203,155
220,854
230,897
197,743
210,618
220,153
179,358
195,292
204,339
173,937
185,055
193,586
132,953
142,353
147,885
131,448
138,673
143,257
123,320
131,477
136,198
121,856
127,797
131,640
108,702115,577
119,512107,268
111,911
115,023
97,082
103,416
107,091
96,113
101,492
104,298
90,683
96,042
99,08089,713
94,11896,35879,28383,65386,06978,314
81,723
83,407
148,313161,253
168,365
145,328
155,563
162,397
137,660
148,897
154,968
134,676
143,207
149,010
121,972
131,507
136,562
118,988
125,821130,593

Growth Rate (%)4
1992
1995
8.2
10.3
9.6
17.4
19.9
43.6
7.6
15.4
6.3
14.1
9.9
23.0
6.7
13.0
9.7
18.8
16.5
28.9
22.9
51.2
7.4
12.0
12.9
27.3
11.8
21.6
13.0
16.3
15.6
21.0
16.4
22.5
17.6
28.7
16.0
23.5
13.1
22.4
12.3
20.2
9.6
18.5
17.8
18.3
9.1
14.0
6.9
11.7
9.0
13.8
6.8
11.6
9.3
14.3
6.8
11.7
8.8
13.7
6.7
11.6
8.7
13.7
6.5
11.3
8.9
13.9
6.4
11.3
7.1
11.2
5.5
9.0
6.6
10.4
4.9
8.0
6.3
9.9
4.3
7.2
6.5
10.3
5.6
8.5
5.9
9.3
4.9
7.4
5.5
8.6
4.4
6.5
8.7
13.5
7.0
11.7
8.2
12.6
6.3
10.6
7.8
12.0
5.7
9.8

Source: Management and Coordination Agency “Annual Consumer Price Index”, Ministry of Labour “Annual Report on
Monthly Labour Survey”, Social Insurance Agency “Annual Operational Report”, Ministry of Health and Welfare“Survey Report on Social Welfare Administration Services”, “Report on Expenditure for Public Assistance”, “theComprehensive Survey of Living Condition of the People on Health and Welfare”, National Council of Social
Welfare “Public Assistance Handbook”, Health and Welfare Statistics Association “Trends in Social Welfare.”Note: 1. Here, we apply the definitions of household types used by the Comprehensive Survey of Living Conditionof the People on Health and Welfare. In the survey “Older Household” means a household constituted of amale over age 65 and a female over age 60 with or without unmarried child(ren) under age 18. “Loneparent” means a single woman (because of partner’s death, divorced, or unmarried) age 20 to 59 (for man
age 20–64) only with child under age 20.
2. The minimum living standard is equal to “Residential Category I plus Residential Category II plus Housing
Assistance.” Seasonal additional amount of Residential Category II, Old-age premium and lone-parent
premium are also considered. In the administrative practice of the public assistance, the other premiums(pregnant premium, disability premium, etc.) are considered, although those premiums are ignored in thistable. Additionally, a certain amount of working income is deductible and the beneficiaries can use “theminimum living cost plus deductible amount of working income” for their consumption.
3. The minimum living cost is based on the public assistance standard, and therefore these numbers are not average.
4. Growth rate. The benefit in 1989 = 100.

94

Atsuhiro YAMADA

The growth rate of the average benefit of the national (basic) old-age pension
was 44% between 1989 and 1995, and the growth rate of the average national
disability pension and national survivor’s pension exceeded at least the consumer
price index in the same period. This tendency, though, is not clear between 1989
and 1992. Indeed, the growth of the average benefit of the national old-age pension
exceeded consumer price index growth, but the growth rate of average national
disability benefit or survivor’s benefit was equal or less than the price index.
Therefore, those household types, including female single older people households,
seem to have fallen behind national prosperity growth during 1989 to 1992.
The growth of average public assistance per capita also exceeded at least theconsumer price index between 1989 and 1995, and education assistance especiallyexceeded wage growth rate in that period. The average disposable income perhousehold grew at a rate equal to or faster than wage growth, but the degree ofgrowth was smaller among households headed by members aged over 50. Households
headed by middle-aged or older people experienced less significant growth indisposable income. Lone-parent households experienced the smallest rate of growth indisposable income, although the rate was still greater than that for wage growth.
The comparisons above indicate that there is no possibility that the social security
benefit level was behind the level of national prosperity during the observed periods.
For example, the growth rate for the disposable income of households headed bypeople aged 50 to 59 was 29%, and for those aged 65 and over it was 22%. However,with regard to the extent of the decline of below-QPAS proportions shown in Table 2,
the proportion of households headed by those aged 65 and over is larger than the
proportion of household headed by members aged 50 to 59. Lone-parent households
have the smallest growth of disposable income on average, but the extent of declineof the below-QPAS proportion of lone-parent households is relatively large.
Thus, these observations lead us to the question of how the low growth ofminimum cost of living causes the high growth rate of average public assistance.
Namely, the growing difference between the real value of the real minimum costof living standard and the real value of the administrative minimum cost of living
standard (public assistance standard) could cause growth in the level of average
public assistance benefits. This is because the real public assistance benefit
supplements the difference between the administrative minimum cost of living
standard and the nominal disposable income plus deductible working income. I
therefore investigated the indexation diversity of the administrative minimum costof living standard among different household types by residential area in thebottom half of Table 3, looking at some typical households.18 Even for the most
18 Inflation differs for urban and rural areas and therefore indexation for six residential areas isdifferent. Big cities are coded as class 1-1 areas and most rural areas are coded as class 3-2, andthe indexation for class 1-1 areas is always the highest and vice versa.

The Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard

95

generous indexation, the increase of administrative minimum cost of living
standard is above the consumer price index and below wage growth. This meansthat the indexation of the administrative minimum cost of living standard canprotect against inflation, but it cannot ensure a link to wage growth. Thisobservation is rational, since the indexation method of the administrative
minimum cost of living standard is linked with expenditure growth.
Interestingly, the increase of the administrative minimum cost of living
standard for the older people couple household and older people single
household is relatively lower than that of the standard three-member household,older people household, and lone-parent household. This means that the older
people couple household or older people single household would face ashrinking safety net supplied by public assistance in this period. The growth of
average pension benefits, though, was higher than the growth of administrative
minimum living costs between 1989 and 1995. Considering that the growth rateof the national old-age pension is high and that low-income groups rely heavily
on the national old-age pension, the older people households in the low
economic position were well targeted by this pension scheme from 1989 to 1995.
The significant decrease of the below-QPAS proportion shown in Table 2 could
explain this targeting process. Nevertheless, this type of household has arelatively high proportion of people in below-QPAS income groups.
4.4. The Economic Diversity of Older People Households

Now, I turn to the question of income diversity of older people households. To
answer this question, I use Gini coefficients, which are sensitive to change in the
middle of income distribution.
The disposable income used for calculation of Gini coefficients is adjusted by
QPAS. The purpose of this method is to adjust for different household member size
and the age structure of household members. The results are shown in Figure 3.
Except for households headed by people aged 20 to 29, older people
households have higher inequality. Tachibanaki (1998) implied that increasing
Gini coefficients would reflect growing social inequality. However, my results
indicate that some component of increasing Gini coefficients would be caused
automatically by an ageing society. This observation by “adjusted” disposable
income fits with research by the Economic Planning Agency (1999) and Ohtake
and Saito (1998), both of which used non-adjusted income.
While Gini coefficients have decreased among household headed by people
aged 65 and over, the coefficients have increased among households headed bythose aged 20 to 39, and those aged 60 to 64, during the economic recession.
There is no significant trend for other households. I applied the same adjustment

96

Atsuhiro YAMADA

Gini Coefficients of Adjusted Household
Disposable Income by QPAS

0.425
1989

0.400

1992

1995

0.375
0.350
0.325
0.300
0.275
0.250
20–29

30–39

40–49

50–59

60–64

65 plusAge of Household Head
Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People on
Health and Welfare.

Figure 3 Trends in the Gini coefficients by age of household head

method for calculating the Gini coefficients of detailed older people household
types to investigate which detailed older people household type shows a strong
trend of decreasing Gini coefficients. The results are shown in the next figure.
The highest Gini coefficient is recorded by the single male household, followedby the single household in 1992 and 1995, and the couple household in 1989.
Households including dependent older people have the lowest Gini coefficient.
With respect to trends, the Gini coefficient of the older people couple
household has decreased, and that of households with dependent older
member(s) has increased. The Gini coefficient of single older people households
increased between 1989 and 1992, and decreased between 1992 and 1995. Inother words, household types with higher Gini coefficients have a downward
tendency, and vice versa. However, it is not appropriate to interpret this result assuggesting that income inequality among older people households isdiminishing. That is because the Gini coefficients in this figure indicate only
relative income inequality among each household type. For example, many
people in the household type actually belong to the lower income group, andthere is a possibility that low income inequality could be observed. As I showed
above, for the purpose of identifying the lower income group, using below-QPAS
is appropriate.

The Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard

97

Gini Coefficients of Adjusted Household
Disposable Income by QPAS

0.500
1989

0.475

1992

1995

0.450
0.425
0.400
0.375
0.350
0.325
0.300
0.275
0.250
All Households

CoupleSingleSingleOlder Household Older Household(Male Age 65+) (Female Age 65+) (Male Age 65+
Headed by Headed by People
and Female
People Age 65+ under Age 65 (theAge 60+)
Person Age 65+
is a subordinate
member)Lone Parent

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People on
Health and Welfare.

Figure 4 Trends in the Gini coefficients by detailed older household type

In Figure 4, I also showed income inequality among lone-parent households.
Lone-parent households exhibit lower income inequality than single female older
people household types, and the figure is close to that for all households.
Needless to say, the below-QPAS proportion among lone-parent households ishigh, and therefore the Gini coefficients simply indicate that there is less income
inequality among those low-income people. Additionally, it shows that theincome inequality among lone-parents has increased.
4.5. Decomposition of Economic Diversity of Older People Households

The Gini coefficients can be decomposed by each income source, using quasiGini coefficients of each income source multiplied by the proportion of theincome source to disposable income. This decomposition provides more insights
on how the trends shown in Figure 3 and 4 can be explained. I use five income
sources for decomposition: a) working income (wage, self-employed income), b)
social transfers (public pensions, means-tested benefits, and other social security
benefits), c) private transfers (periodical payment from relatives, the other private
incomes), d) capital incomes (rent, interest, dividend), e) taxes and contributions

98

Atsuhiro YAMADA(income tax, residents’ tax, property tax, social security contributions). Quasi-Gini
coefficients of each income source are calculated to sort each income source inascending order of disposable income. However, each income source itself is notnecessarily sorted in ascending order. For example, households with low
disposable income would receive large amount of social transfers. Hence, theterm quasi-Gini coefficients is being used.
The sum of the quasi-Gini coefficient multiplied by the proportion of each
income source to disposable income is equal to Gini coefficients shown in Figure 3
and 4. Figure 5 shows the result of decomposition for household head age category.
I shall offer some explanation by way of looking at an example taken from the
top middle panel for households headed by members aged 20 to 29. In eachpanel, I show decomposition trends for three time periods. In panel (b), thelargest contribution to income inequality comes from working income, indicatedby white bars. On the other hand, the other income sources, social transfers,
private transfers, and capital incomes, contribute a little to income inequality;
taxes and contributions, indicated by black bars, lower the income inequality, as
I expected. With regard to trends, the contribution of working income has
increased between 1989 and 1992, although there is no significant change
between 1992 and 1995. These observations are common to the households
headed by the other age group up to age 59.
Those households headed by members aged 60 to 64, and 65 and over, havedifferent features. In terms of households headed by those aged 60 to 64, while
the contribution of working income has been slightly larger, the contribution ofsocial transfers has become smaller. On the other hand, among households
headed by people aged 65 and over, the contribution of working income andcapital income has decreased between 1989 and 1995. I already mentioned that
the Gini coefficients of households headed by those aged 65 and over havedecreased and this can be explained by the declining contribution of working
incomes and capital incomes. This result is consistent with the fact that thecentral bank had lowered the interest rate to zero, that high unemployment rates
induce older workers to retire, and that more older people prefer to live
independently from their adult children and therefore receive less working
income from them. The contribution of social transfers is greater amonghouseholds headed by people aged 65 and older. This could be explained by the
income-related public pension scheme (Employees’ Pension and Mutual Aid
Association Pension) in Japan. Applying the same method, I show the results ofthe decomposition of Gini coefficients for detailed older household type. The
decomposition for lone-parent household is also available by panel (g) in Figure 6.
It is self-explanatory that the structure of inequality differs by each detailed
older people household type. Among single older people household, theThe Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard(a) All Households
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

(b) Households Headed by Persons Age 20–29

1992

1995

(c) Households Headed by Persons Age 30–39
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

(e) Households Headed by Persons Age 50–59
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

(d) Households Headed by Persons Age 40–49
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

(f) Households Headed by Persons Age 60–64
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

(g) Households Headed by Persons Age 65 and over
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

Working Incomes
Social Transfers
Private Transfers
Capital Incomes
Taxes and Contributions
1989

1992

1995

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People
on Health and Welfare.

Figure 5 Decomposition of the Gini coefficients by income resource andage of household head

99

100

Atsuhiro YAMADA(a) All Households(b) Single (Male Age 65+)

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

1989

1992

1995

(c) Single (Female Age 65+)(d) Couple (Male Age 65+ and Female Age 60+)

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

1989

1992

1995

(e) Older Household Headed by
Persons Age 65+(f) Older Household Headed by Persons under Age 65(the Person Age 65+ is a subordinate member)

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1989

1992

1995

1989

1992

1995

(g) Lone Parent
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

Working Incomes
Social Transfers
Private Transfers
Capital Incomes
Taxes and Contributions
1989

1992

1995

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People
on Health and Welfare.

Figure 6 Decomposition of Gini coefficients by income resource anddetailed older household type

The Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard

101

contribution of social transfers is relatively large, but the contribution of working
income is quite different between single female households and single male
households. I showed that income inequality among single male households ishigh in Figure 4, and this feature is produced by the high diversity of sources ofworking income amongst that group. In addition to that, Figure 6 also shows thatthe decreasing contribution of capital income is more obvious among single male
households. This result is conceivably the consequence of extremely low interest
rates. With respect to female single older people households, it is desirable to pay
attention to the fact that social transfers are the largest contributor to inequality
and contributions have increased. Income inequality has decreased among couple
older people households, and it can be mainly explained by the decreasing
contribution of working income. The income inequality structure of older people
households headed by members aged 65 and over, and that of households withdependent older people member(s) aged 65 and over, are the same for that of allhouseholds. Nevertheless, the contribution of working income among householdswith dependent older people aged 65 and over is smaller than that of older
people households headed by members aged 65 and over. Concerning loneparent households, panel (g) shows that the increasing contribution of working
income is the main reason of increasing income inequality among households ofthis type. The negative contribution of taxes and contributions offset a part of it.
4.6. Contribution of Working Income to Diversity

It would be desirable to emphasize again that working income is the largest
contributor to income inequality among older people households. According toFukawa (1995), who presents a comparison between the composition ofretirement income in Japan and the composition of retirement income in the
United States by income quintile: the proportion of working income is generallyhigh in Japan and the proportion of capital income is generally high in the
United States. The importance of working income for older households in Japan
was also confirmed by Disney et al. (1998) in an international comparison which
covers conditions in Australia, France, Germany, Italy, Japan, the Netherlands,
Sweden, the UK and the USA. Relatively high inequality among older people
households in Japan is conceivably caused by the high labour force participation
rate of older people. Of course, the living arrangements in Japan, which provide
for intra-household transfers from working adult children, and therefore transfersof working income to older people members, provide a partial reason. However,as shown in Figure 6, the contribution of working income is also the largest
contribution among those households without adult children.
For example, let us assume that there are two countries. In country A, half of102

Atsuhiro YAMADA

the older people are retired with pensions, and half of the older people are stillworking. In country B, most of the older people are retired with pensions. The
income inequality amongst older people in country A would be much higher than
the income inequality in country B, unless income taxes, social security
contributions, or social transfers did not have any redistributive factor. Then, thequestion of which country is more desirable as an ageing society, is a normative
question. Especially in Japan, many of the older people want to continue
working, and therefore a high labour force participation rate in Japan can be
regarded as an appropriate situation.19 Undoubtedly, it is still necessary to pay
attention to the fact that female older people single households have low incomes
and, therefore, this household type boosts the inequality indicator.

5. Conclusions
In my analysis, I examined the low-income group, income inequality among eachhousehold type, and the decomposition of inequality by five income sources,using QPAS with administrative minimum cost of living standard as an adjuster
and a benchmark. The trends in the social security benefit level and its indexation
were also examined. However, there are some provisos for my analysis in terms
of using QPAS. QPAS is not exactly the same as the administrative minimum costof living standard, since it does not consider several premiums except the loneparent premium, the old-age premium, and the childcare premium. The disability
premium is a relatively large amount, though I could not estimate it because of
the limited information available from the data. Additionally, several types ofassistance, which are in-kind benefits and provided by the public assistancescheme, tax exemptions, and social security contribution exemption, are ignored,
and income mobility among people on the borderline was not examined. The real
economically disadvantaged people, therefore, might not be captured
appropriately in my analysis.
However, the more important criticism of this analysis would be that I use theadministrative standard, and that usage itself could be called into question.
Nevertheless, public assistance, which is the basis of QPAS, is a fundamental
element of the Japanese social security system, as it functions as a safety net. I
therefore believe that empirically capturing the people below the borderline forthe safety net using the QPAS measurement would provide the basic information
for future reform on social security. The information on potential beneficiaries of

19 According to Ministry of Labour (1996), 50% of males aged 65 to 69 are workers, and 40% of

non-workers still wish to work.

The Economic Situation and Income Inequality among the Elderly in Japan:
Measurement by Quasi Public Assistance Standard

103

public assistance could provide some insights on how it is impossible to cut
benefit levels of public pensions generally without causing more beneficiaries torely on public assistance.
I offer the following remarks on social policy implications. First, the below-QPAS
proportion among female older people single households exceeds 10%, and among
the lone-parent households that proportion is much higher. Considering the ageing
society and increasing divorce rates, these two household types are still an
important group for social policy to target. Second, while income inequalities
among older people households are decreasing, the income inequality among loneparent households is growing as a result of the increasing contribution of working
income to inequality. This suggests that social policy needs to take account of thespecial needs of lone-parents for working opportunity. Third, the income inequality
among households headed by older people is higher than that among households
headed by younger people and people in middle age, although working income isstill the main contributor. Accordingly, high-income inequality among older people
is not a social problem, as it follows on from the high labour force participation
rate of older people. Fourth, the contribution of capital income-to-income
inequality has decreased between 1989 and 1995 among most types of household.
The extremely low interest rate, followed by the latest economic recession,conceivably caused this phenomenon. Consequently, if the interest rate rises in the
future, the contribution of capital income to inequality would increase again. Fifth,
the main contributor to inequality among single female households is the socialtransfer, and this would suggest that there is some room for targeting that group.
Last, the indexation of administrative minimum living costs used for public
assistance is higher than the growth in the consumer price index, although lower
than wage growth rate. The indexation also varies for different household types
and residential areas. The indexation of the administrative minimum living costfor single older people household or couple older people households is lower
than that of the standard three-member household. The latest public pension
reform, which was enacted in April 2000, modified the indexation method of the
public pension. After the reform, once the pension benefit is awarded, thebenefit level will be increased only in accordance with the consumer price index.
Prior to this reform, the awarded pension benefit was also indexed to the growthrate in net wages every five years. This change of indexation by the reform might
gradually bring the importance of public assistance into relief.
However, the special indexation rule will be applied when the benefit level
hypothetically indexed by the old rule exceeds a certain proportion20 of the

20 What is “the certain difference” is not clear in the latest reform, though the actuarial revaluation

prior to the reform suggests that it would be 5–20%. Political debate would also alter this range.

104

Atsuhiro YAMADA

benefit level actually indexed by the new rule—and the average benefit level ofthe national basic pension has significantly increased. Therefore, it is yet unclear
whether the number of potential beneficiaries of public assistance will increase in
the future. In terms of the general policy implications for public pensions, how
to precisely target specific older people households, and how to allocate thetightening pension resources in a way that takes account of other sources ofretirement income that are available and the diversity of the needs of older
people households could be the key questions for the next pension reform.

References
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106

Atsuhiro YAMADAAppendix Composition of household typea. All Households = 100%
All Households
Households Headed by Persons Age 20–29
30–39
40–49
50–59
60–64
65+
Single (Male Age 65+)
Single (Female Age 65+)
Couple (Male Age 65+ and Female Age 60+)
Older Household Headed by Persons Age 65+
Older Household Headed by Persons under Age 65(Members Age 65+ are subordinates)
Lone Parent

1989

1992

1995

100.0
7.8
18.3
25.6
23.3
9.1
15.8

100.0
8.3
15.5
24.4
22.7
10.3
18.8

100.0
8.2
14.0
22.3
22.2
10.5
22.9

0.7
3.0
5.2
6.9

0.8
3.6
6.6
8.0

1.1
4.2
8.0
9.6

14.2

12.4

11.5

1.2

1.2

1.0

1989

1992

1995

2.3
10.0
17.3
23.1

2.5
11.4
21.0
25.5

3.3
12.2
23.1
27.9

47.3

39.6

33.4

b. Household with Member(s) Age 65 and over = 100%Single (Male Age 65+)
Single (Female Age 65+)
Couple (Male Age 65+ and Female Age 60+)
Older Household Headed by Persons Age 65+
Older Household Headed by Persons under Age 65(Member Age 65+ are subordinates)

Source: Author’s calculations from the Comprehensive Survey of Living Condition of the People on
Health and Welfare.
Note: As some household types used in our analysis are slightly different from the original survey, thenumbers in this table would be different from the official tabulations reported by Ministry of
Health and Welfare.