Unemployment, Income Growth and Social Security

Considering the sustainability of social security in an aging society with fewer children, income growth and population growth are important factors. With a decrease in income growth or population growth, social security transfers such as pension benefits cannot be provided. The intergenerational social security benefit is being reassessed in some OECD countries. In Japan, social security benefits for younger people are small because of an aging society. This paper presents description of an unemployment model with a minimum wage and social security benefits and presents examination of how unemployment benefits for the younger people affect income growth, fertility, and welfare. The results described herein demonstrate that unemployment benefits raise the capital stock and income level per capita. Therefore, this benefit should be provided to maintain the tax revenue for social security. Moreover, this benefit can increase social welfare