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Females, the Elderly, and Also Males: Demographic Aging and Macroeconomy in Japan

Author

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  • KITAO Sagiri
  • MIKOSHIBA Minamo
  • TAKEUCHI Hikaru

Abstract

The speed and magnitude of the ongoing demographic aging in Japan are unprecedented. A rapid decline in the labor force and a rising fiscal burden to finance social security expenditures could hamper growth over a prolonged period. We build a dynamic general equilibrium model populated by overlapping generations of males and females who differ in employment type and labor productivity in addition to life expectancy. We study how changes in the labor market over the coming decades will affect the transition path of the economy and fiscal situation of Japan. We find that a rise in the labor supply of females and the elderly of both genders in extensive margin and in productivity can significantly mitigate the effects of demographic aging on the macroeconomy and reduce fiscal pressures, despite a decline in wages during the transition. We also quantify effects of alternative demographic scenarios and fiscal policies. The study suggests that a combination of policies that remove obstacles hindering the labor supply and that create a more efficient allocation of male and female workers of all age groups will be critical to keeping government deficits under control and raising incomes across the nation.

Suggested Citation

  • KITAO Sagiri & MIKOSHIBA Minamo & TAKEUCHI Hikaru, 2019. "Females, the Elderly, and Also Males: Demographic Aging and Macroeconomy in Japan," Discussion papers 19039, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:19039
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Females, the elderly, and also males: Demographic aging and macroeconomy in Japan
      by Christian Zimmermann in NEP-DGE blog on 2019-07-07 00:17:31

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    Cited by:

    1. Eiji Yamamura, 2021. "View about consumption tax and grandchildren," Papers 2102.04658, arXiv.org.
    2. Zvedelikova, Mirka, 2024. "Preference for young workers in mid-career recruiting using online ads for sales jobs: Evidence from Japan," The Journal of the Economics of Ageing, Elsevier, vol. 27(C).
    3. Okamoto, Akira, 2022. "Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 76-104.
    4. Fukuda, Shin-ichi & Okumura, Koki, 2021. "The aging society, savings rates, and regional flow of funds in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 62(C).
    5. Okamoto, Akira, 2021. "Immigration policy and demographic dynamics: Welfare analysis of an aging Japan," Journal of the Japanese and International Economies, Elsevier, vol. 62(C).
    6. FUKAI Taiyo & ICHIMURA Hidehiko & KITAO Sagiri & MIKOSHIBA Minamo, 2021. "Medical Expenditures over the Life Cycle: Persistent Risks and Insurance," Discussion papers 21073, Research Institute of Economy, Trade and Industry (RIETI).
    7. KIKUCHI Shinnosuke & KITAO Sagiri & MIKOSHIBA Minamo, 2020. "Heterogeneous Vulnerability to the COVID-19 Crisis and Implications for Inequality in Japan," Discussion papers 20039, Research Institute of Economy, Trade and Industry (RIETI).
    8. KIKUCHI Shinnosuke & FUJIWARA Ippei & SHIROTA Toyoichiro, 2023. "Automation and the Disappearance of Routine Work in Japan," Discussion papers 23082, Research Institute of Economy, Trade and Industry (RIETI).
    9. Fukuda, Shin-ichi & Okumura, Koki, 2020. "Regional convergence under declining population: The case of Japan," Japan and the World Economy, Elsevier, vol. 55(C).
    10. Kikuchi, Shinnosuke & Kitao, Sagiri & Mikoshiba, Minamo, 2021. "Who suffers from the COVID-19 shocks? Labor market heterogeneity and welfare consequences in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 59(C).
    11. Inoue, Toshikatsu, 2022. "The effect of aging on the age–wage profile in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 66(C).
    12. KITAO Sagiri & MIKOSHIBA Minamo, 2022. "Why Women Work the Way They Do in Japan: Roles of Fiscal Policies," Discussion papers 22016, Research Institute of Economy, Trade and Industry (RIETI).
    13. Andrea BONFATTI & Selahattin Ä°MROHOROÄžLU & KITAO Sagiri, 2019. "Aging, Factor Prices and Capital Flows," Discussion papers 19110, Research Institute of Economy, Trade and Industry (RIETI).
    14. Mirka Zvedelikova, 2022. "Preference for Young Workers in Mid-career Recruiting Using Online Ads for Sales Jobs: Evidence from Japan," ISER Discussion Paper 1193rr, Institute of Social and Economic Research, Osaka University, revised Oct 2023.
    15. Hirokuni Iiboshi & Daisuke Ozaki, 2022. "The Impact of the Social Security Reforms on Welfare: Who benefits and Who loses across Generations, Gender, and Employment Type?," Papers 2205.08042, arXiv.org, revised Oct 2022.
    16. Bonfatti, Andrea & İmrohoroğlu, Selahattin & Kitao, Sagiri, 2022. "Japan and the allocation puzzle in an aging world," Journal of Economic Dynamics and Control, Elsevier, vol. 145(C).
    17. Shinnosuke Kikuchi & Sagiri Kitao & Minamo Mikoshiba, 2020. "Who Suffers from the COVID-19 Shocks? Labor Market Heterogeneity and Welfare Consequences in Japan (Forthcoming in the Journal of the Japanese and the International Economies)," CARF F-Series CARF-F-490, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    18. Kato, Ryuta Ray, 2022. "Population aging and labor mobility in Japan," Japan and the World Economy, Elsevier, vol. 62(C).
    19. Xiao Shen & Jingbo Liang & Jiangning Cao & Zhengwen Wang, 2022. "How Population Aging Affects Industrial Structure Upgrading: Evidence from China," IJERPH, MDPI, vol. 19(23), pages 1-23, December.
    20. Mirka Zvedelikova, 2022. "Preference for Young Workers in Mid-career Recruiting Using Online Ads for Sales Jobs: Evidence from Japan," ISER Discussion Paper 1193r, Institute of Social and Economic Research, Osaka University, revised Jun 2023.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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