  We quantitatively explore the impact of social security reforms in Japan,
which is facing rapid aging and the highest government debt among developed
countries, using an overlapping generations model with four types of agents
distinguished by gender and employment type. We find that introducing social
security reforms without extending the retirement age raises the welfare of
future generations, while reforms with rising copayment rates for medical and
long-term care expenditures, in particular, significantly lowers the welfare of
low-income groups (females and part-timers) of the current retired and working
generations. In contrast, reforms reducing the pension replacement rate lead to
a greater decline in the welfare of full-timers. The combination of these
reforms and the extension of the retirement age is expected to improve the
welfare of the current working generations by 2--9 % over the level without
reforms.
