A Reexamination of Basic Pension Reform Financed by a Consumption Tax: An Analysis Using the Right-to-Manage Model

This paper examines pension premiums and a consumption tax as ways to finance basic pensions. The union wage model suggests that labor wage taxation increases the rate of unemployment. Using the right-to-manage model, it becomes clear that an increase in premiums for labor wages actually leads to increased unemployment rates. Furthermore, I argue that by decreasing premiums and introducing consumption tax for basic pension, the rate of unemployment will decrease. However, the study revealed that this basic pension reform would decrease benefits to individuals because of the additional charges.