The Impact of Demographics on Productivity and Inflation in Japan

Niklas Westelius and Yihan Liu

No 2016/237, IMF Working Papers from International Monetary Fund

Abstract: Is Japan’s aging and, more recently, declining population hampering growth and reflation efforts? Exploiting demographic and economic variation in prefectural data between 1990 and 2007, we find that aging of the working age population has had a significant negative impact on total factor productivity. Moreover, prefectures that aged at a faster pace experienced lower overall inflation, while prefectures with higher population growth experienced higher inflation. The results give strong support to the notion that demographic headwinds can have a non-trivial impact on total factor productivity and deflationary pressures.

Keywords: WP; TFP growth; Aging; Population Growth; Inflation; Productivity; depressed total factor productivity; dependency ratio; productivity gap; prefectural total factor productivity; annual total factor productivity growth; UN data; working age population; UN population statistic; Total factor productivity; Labor force participation; Global (search for similar items in EconPapers)
Pages: 18
Date: 2016-12-08
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Citations: View citations in EconPapers (13)

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Journal Article: The Impact of Demographics on Productivity and Inflation in Japan (2017)
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