Population aging, government policy and the postwar Japanese economy

Keisuke Otsu, Katsuyuki Shibayama

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This paper analyzes the Postwar Japanese economy with a parsimonious neoclassical growth model that incorporates the demographic transition in Japan. We find that i) the increase in the aged population share can account for most of the decline in employment and reduced output by 8%, ii) workweek shortening policy led to a 20% reduction in output from its potential level by reducing hours worked over the 1988-1994 period, iii) the rise in labor tax led to an 11% reduction in output from its potential level by discouraging hours worked, iv) the shift in the composition of government spending may have caused a slowdown in productivity growth and hence a reduction in the potential output level itself.

Original languageEnglish
Article number101191
JournalJournal of The Japanese and International Economies
Volume64
DOIs
Publication statusPublished - 2022 Jun
Externally publishedYes

Keywords

  • Neoclassical growth model
  • Population aging
  • Productivity growth
  • Workweek shortening

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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