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

Sagiri Kitao (), Minamo Mikoshiba and Hikaru Takeuchi

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

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.

Pages: 32 pages
Date: 2019-05
New Economics Papers: this item is included in nep-age and nep-dge
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https://www.rieti.go.jp/jp/publications/dp/19e039.pdf (application/pdf)

Related works:
Journal Article: Females, the elderly, and also males: Demographic aging and macroeconomy in Japan (2020) Downloads
Working Paper: Females, the elderly, and also males: Demographic aging and macroeconomy in Japan (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:19039

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