Age-period-cohort decomposition of social security taxes and benefits in the USA and Japan

Aggregate data of social security taxes and benefits in the USA and Japan, classified by period and by age, are decomposed into age, period, and cohort effects using the Bayesian cohort models which were developed to overcome the identification problem in cohort analysis. Regarding to US results, it is shown that period and cohort effects have negligible impact on US social security taxes and benefits which are measured as the share of household expenditure and income, respectively. Regarding to Japanese results, it is shown that period effects show a moderate trend in social security taxes and that cohort effects indicate small up-and-down movements. © Springer-Verlag 2007.