The Economics of Social Security in Japan

The Economics of Social Security in Japan

ESRI Studies Series on Ageing

Edited by Toshiaki Tachibanaki

This book provides a comprehensive appraisal of social security in Japan, where traditionally the burden of welfare provision has been the main responsibility of the family and employers, rather than the state. However, an ageing population, changes in family structure and continued recession has led to an urgent reappraisal of this situation.

Chapter 5: Effects of the old-age pension system for active employees on the labor supply of elderly male workers

Fumio Ohtake and Hisaki Yamaga

Subjects: asian studies, asian social policy, economics and finance, welfare economics, social policy and sociology, comparative social policy, economics of social policy

Extract

5. Effects of the old-age pension system for active employees on the labor supply of elderly male workers Fumio Ohtake and Hisaki Yamaga 1. INTRODUCTION Declining birth rates and an ageing population are expected to reduce the labor force in Japan in the early twenty-first century. To mitigate the effects of this decline in the workforce, it is essential to raise the labor force participation rates of women and of elderly persons. Iwamoto (1998) estimates that if there is no change in the labor supply within each age cohort, the labor force in Japan will decline by 6310000 between 2000 and 2020. A forecast using a macroeconometric model also suggests a decline in the workforce of six million. Because a decline in the birth rate results in a decrease in the total population, the non-working population will also decrease. If the dependency rate (which indicates the number of insured persons supporting each pensioner) remains unchanged, the decline in the labor force may well be acceptable. There is also the possibility of changes in industrial structure and the possibility that technical innovation will help support the labor force. Nevertheless, it is worth increasing the workforce by raising the labor force participation rates of women and of elderly people, who are currently underutilized because of various institutional restrictions. Summarizing the results of recent studies, Iwamoto (1998) forecasts that a doubling of the staff at nursery schools would lead to new jobs for about 300 000 to 600 000 women...

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