Estimates of the Future Number of Companies by Region

Yoshiaki Murakami, Naomi Kodama and Yoshio Higuchi
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Yoshiaki Murakami: Lead Economist, Japan Finance Corporation Research Institute
Yoshio Higuchi: Professor, Faculty of Business and Commerce, Keio University

Public Policy Review, 2018, vol. 14, issue 1, 81-114

Abstract: This paper projects the number of companies that will play a vital role as a source of labor demand and the number of employees for each prefecture in Japan until 2040. The noteworthy point of this paper lies in the fact that it utilizes the population decline and the change in age structure of the population in each region as the driving factors of company openings and closings and then estimates the number of employees using companies f demand for labor. According to our estimates, the number of companies and employees will fall from 4,025,000 and 58,457,000, respectively, in 2015 to 2,956,000 and 45,981,000 in 2040. The rate of decline is not uniform across the nation; in fact, the concentration of companies and employees in major urban areas will continue to rise. In addition, the rate of decline in companies and employees is greatest until around 2025, when many current company managers will be retiring. As a result, until around 2025, almost all prefectures in Japan will temporarily experience sharper rates of decline in the number of employees than in the working - age population. The excess supply of labor will be particularly noticeable in urban areas. By 2040, the labor market will go back to another period of tightness similar to that experienced in 2015. Therefore, until around 2025, it will be critical to provide focused support for business succession, so as to prevent business closures caused by managers f retirement. Our simulation suggests that focusing support for businesses on start - ups by women and retired elderly would be effective to increase the number of new company start - ups.

Keywords: business start - ups; business closures; business succession; number of companies; labor supply (search for similar items in EconPapers)
JEL-codes: J11 J23 R12 (search for similar items in EconPapers)
Date: 2018
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