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Ageing and the Labor Market in Japan

Problems and Policies

Edited by Koichi Hamada and Hiromi Kato

This book is a concerted attempt by economists to investigate and offer remedies for some of the difficulties associated with an ageing labor market.
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Chapter 6: Ageing Society and the Choice of Japan: Migration, FDI and Trade Liberalization

Junichi Goto


Junichi Goto 1. INTRODUCTION As the Japanese population is rapidly ageing, it is expected that Japan will face a serious labor shortage in the near future. It is often pointed out that, in order to cope with such a labor shortage, Japan should open the door to international migration. It is also pointed out that the increased migration to Japan would also benefit sending countries through remittance and employment creation. However, as I wrote elsewhere (see Goto, 1993), in order to realize the same positive effects, there are various alternatives to international migration. For example, the increased labor participation of Japanese women would relieve the expected labor shortage. Further, instead of accepting huge numbers of workers migrating from abroad, Japan could utilize foreign labor indirectly by increasing outgoing FDI and/or by reducing trade restrictions on labor-intensive imports (that is, movement of ‘money’ and/or ‘goods’ rather than the movement of ‘people’). In view of the above, in the present study, I will investigate, both theoretically and empirically, the merits and demerits of the international movements of labor, capital and goods, and their implications for the ageing society in Japan. I will investigate what kind of policy measure is most desirable for Japan and labor-sending countries. In the next section, I will briefly examine the ageing issue in Japan. The Japanese population is rapidly ageing and the fertility rate is steadily declining. In view of this, it is widely argued that, in order to cope with a possible labor...

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