Females, the elderly, and also males: Demographic aging and macroeconomy in Japan
Sagiri Kitao (),
Minamo Mikoshiba and
CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University
The speed and magnitude of 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 as well as 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 an extensive margin and in labor productivity can significantly mitigate effects of demographic aging on the macroeconomy and reduce fiscal pressures, despite a decline in wage 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 labor supply and that enhance a more efficient allocation of male and female workers of all age groups will be critical to keeping government deficit under control and raising income across the nation.
Keywords: Japanese Economy; Demographic Trends; Female and Elderly Labor Force Participation; Overlapping Generation Model. (search for similar items in EconPapers)
JEL-codes: E62 J11 J21 H55 (search for similar items in EconPapers)
Pages: 33 pages
New Economics Papers: this item is included in nep-age, nep-dge, nep-lab and nep-mac
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Journal Article: Females, the elderly, and also males: Demographic aging and macroeconomy in Japan (2020)
Working Paper: Females, the Elderly, and Also Males: Demographic Aging and Macroeconomy in Japan (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-37
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