Aging and the real interest rate in Japan: A labor market channel

Shigeru Fujita and Ippei Fujiwara

Journal of the Japanese and International Economies, 2023, vol. 69, issue C

Abstract: This paper explores a causal link between aging of the labor force and the declining trend in the real interest rate in Japan. We develop a search and matching model that features heterogeneous workers with respect to their ages and firm-specific skills. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure induce significant low-frequency movements in per capita consumption growth and thus the real interest rate. The model suggests that aging of the labor force caused the real interest rate to decline by 1 percentage point between 1980 and 2010 in Japan.

Keywords: Aging; Real interest rate; Japan (search for similar items in EconPapers)
JEL-codes: E24 E43 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889158323000175
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Aging and the Real Interest Rate in Japan: A Labor Market Channel (2021)
Working Paper: Aging and the Real Interest Rate in Japan: A Labor Market Channel (2021)
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:eee:jjieco:v:69:y:2023:i:c:s0889158323000175

DOI: 10.1016/j.jjie.2023.101262

Access Statistics for this article

Journal of the Japanese and International Economies is currently edited by Takeo Hoshi

More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().