Japan's Aging Workforce: Determinants and Outlook

Sagiri Kitao and Nozomi Takeda

Asian Economic Policy Review, 2025, vol. 20, issue 2, 251-260

Abstract: This paper examines recent trends in the Japanese labor market, with a particular focus on the elderly workforce. Japan's elderly employment rates are notably high compared to other OECD countries and have increased significantly over the past two decades. To investigate the factors that affect the employment of old individuals, we develop a structural life‐cycle model with consumption‐saving decisions and endogenous labor supply in both intensive and extensive margins. The model is calibrated to the cohort of men born in 1936–1940. We find that social security reforms to raise the retirement age by 5 years and reduce the replacement rate by 20% would have increased labor force participation among men in their 60s from 58% to 69% and 67%, respectively, while also encouraging greater retirement savings. Furthermore, we find that overall labor productivity growth reduces elderly participation due to an income effect, whereas productivity growth among the elderly, driven by lower skill depreciation, motivates longer labor force participation.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/aepr.12506

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:asiapr:v:20:y:2025:i:2:p:251-260

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1832-8105

Access Statistics for this article

Asian Economic Policy Review is currently edited by Takatoshi Ito, Akira Kojima, Colin McKenzie and Shujiro Urata

More articles in Asian Economic Policy Review from Japan Center for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().