Chapter 2: Factors Affecting Labor Force Participation in Japan: Empirical Study of Labor Supply of the Elderly and Females
2. Factors aﬀecting labor force participation in Japan1: empirical study of labor supply of the elderly and females Hirotsugu Sakai and Hitoshi Asaoka 1. INTRODUCTION According to the ‘Projection of Japanese Population’ by the National Institute of Population and Social Security Research, the productive-age population of Japan, aged 15 to 64, will keep on decreasing due to the drastically decreasing fertility rate which reached its peak in 1995. The labor force population will decrease accordingly, and thus push down the potential growth of GDP. It is necessary to ﬁnd a way to soften the negative impact of the shrinking working population on economic growth, especially by utilizing the elderly and female population who are willing to participate in the labor force. Japan’s female labor force participation rate by age exhibits a typical M-shaped curve with the troughs existing in the 25–34 years age groups. Its trough is deeper than those of most other developed countries. Thus, one possible and immediate way to increase the current labor force is to promote the labor force participation of the females aged 25–34. Not only from an economic aspect, but also from social and cultural aspects, policy measures to increase the female labor force in Japan today are desirable, considering the fact that more and more females are entering higher education. Also, since there will be a sharp increase in the proportion of the elderly in Japan’s population in the near future, promoting the labor force participation of the elderly would...
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