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Population aging, government policy and the postwar Japanese economy

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  • Otsu, Keisuke
  • Shibayama, Katsuyuki

Abstract

This paper analyzes the Postwar Japanese economy with a parsimonious neoclassical growth model that incorporates the demographic transition in Japan. We find that i) the increase in the aged population share can account for most of the decline in employment and reduced output by 8%, ii) workweek shortening policy led to a 20% reduction in output from its potential level by reducing hours worked over the 1988-1994 period, iii) the rise in labor tax led to an 11% reduction in output from its potential level by discouraging hours worked, iv) the shift in the composition of government spending may have caused a slowdown in productivity growth and hence a reduction in the potential output level itself.

Suggested Citation

  • Otsu, Keisuke & Shibayama, Katsuyuki, 2022. "Population aging, government policy and the postwar Japanese economy," Journal of the Japanese and International Economies, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:jjieco:v:64:y:2022:i:c:s0889158322000016
    DOI: 10.1016/j.jjie.2022.101191
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    Cited by:

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    3. Kato, Ryuta Ray, 2022. "Population aging and labor mobility in Japan," Japan and the World Economy, Elsevier, vol. 62(C).
    4. Ke Zhang & Hao Sun & Xiangyu Li, 2022. "Aging Population Spatial Distribution Discrepancy and Impacting Factor," Sustainability, MDPI, vol. 14(15), pages 1-22, August.
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    6. Han, Fei, 2024. "The impact of demographic change on the natural rate of interest in Japan," Japan and the World Economy, Elsevier, vol. 69(C).
    7. Keisuke Otsu & Katsuyuki Shibayama, 2016. "Population Aging and Potential Growth in Asia," Asian Development Review, MIT Press, vol. 33(2), pages 56-73, September.

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