The analysis of involutionary behavior in the East Asian region: a multi-period overlapping generations model approach

The phenomenon of “involutionary competition” in the East Asian region has emerged as a critical challenge impacting socioeconomic development. How to change the involutionary behavior effectively while enhancing well-being and societal competitiveness constitutes a critical issue for regional sustainable development. This study develops a multi-period overlapping generations (OLG) model incorporating three key variables such as income distribution systems, social security mechanisms, and property rights regimes. Under adaptive expectations, we analyze intergenerational strategic choices between “involutionary” (high-effort) and “lying flat” (low-effort) behaviors. The findings of our research reveal that insufficient distributive equity and uncertainty in effort-reward returns constitute primary drivers of involution, whereas generous welfare provisions may induce lying flat behavior through risk reduction. Through the simulations of China, Japan, and South Korea, we examine how to influence intergenerational equilibrium strategies by institutional designs including particularly income tax policies, pension replacement rates and property rights clarity. The policy recommendations are given for optimizing institutional frameworks to address the involution-lying flat dilemma, providing theoretical insights for human capital revitalization and sustainable development in aging societies.