The growth strategy of Abenomics and fiscal consolidation

Using a general equilibrium model with an overlapping generation structure, this study examines the impacts of a new Abenomics growth strategy on fiscal consolidation in Japan. Our simulation yielded the following results. (i) It is difficult to achieve the government target of fiscal consolidation by the year 2020 even when assuming that the growth strategy has the desired effects. (ii) Moreover, further economic and fiscal reforms are required from 2030 to 2070 because of accelerated population aging. (iii) However, population policy and an extended retirement age contribute to significant improvements in Japan’s fiscal condition after 2070. (iv) In contrast, the promotion of productivity and the labor force participation rate have a lesser impact on fiscal reconstruction.     

Aging labor,ICT capital,and productivity in Japan and Korea

This study examines how aging affects labor productivity using industry-level data of Japan and Korea. The analysis shows that, for both Japan and Korea, aging has positive effects on labor productivity when older workers are working in industries with a large share of information and communication technology (ICT) in the capital stock. We also find that, on average, older workers exert positive effects on labor productivity across all industries when they are low-educated in Japan and high-educated in Korea. In addition, a complementary effect between ICT capital and older workers is observed for both high- and low-educated workers in Japan but only for low-educated workers in Korea. The complementarity between ICT and old workers existed in both manufacturing and services industries of Korea and Japan.     

Population aging in Japan: demographic shock and fiscal sustainability

The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior, which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper estimates the output loss caused by demographic changes and assesses the impact of aging on Japan’s government finances. Key fiscal policy options to address the consequences of aging are also compared with respect to their effects on growth and welfare.     

Robots and industrial labor: Evidence from Japan

This paper provides one of the first studies of the impact of the introduction of robots to equilibrium labor demand in an entire economy. We use long-term (1979–2012) industry-level panel data from Japan, a country that is over 10 times as intensive in the use of robots as in the U.S. Our model, which is derived from Acemoglu and Restrepo (2017), shows that there are three effects on labor demand in the aggregate economy from the introduction of industrial robots. The first is the negative displacement effect of robots taking over the tasks of humans. The second is the positive industry productivity effect of robots lowering costs in a particular industry. This lowering of costs draws demand to the industry and expands output and employment in that industry. The third is the positive general equilibrium effect. Robots raise productivity and expands demand in all industries, thereby increasing the product and labor demand for the industry introducing the robots. In our estimation, we find that the displacement effect is insignificant, the productivity effect is sometimes positively significant, and the macroeconomic general equilibrium effect is always highly positively significant. Overall, the introduction of robots has been beneficial to the demand for labor in Japan. Our results are robust to various controls and instrumental variables.     

Sources of Chinese labor productivity growth: A structural decomposition analysis, 1987–2005

We decompose labor productivity growth from 1987 to 2005 by examining six partial factors (both supply and demand): changes in value-added coefficients, labor inputs, shares of sectoral demands that are fulfilled domestically, input mix, and the intra-sectoral shares and intersectoral mix of final demand. Our analysis confirms that simply by virtue of its size and extremely low level of labor productivity, China's farm sector continues to weigh heavily in China's overall economic advances. Labor savings have levied the largest influence on the labor productivity on all sectors across all three study subperiods. We find that this transition is highly correlated with capital deepening that accompanies China's opening up process. Still, changes in the intra-sectoral shares and the intersectoral mix of China's final demand also have become quite strong, especially in recent periods. Due to ever-increasing competitive pressures as China continues to open, changes in industries value-added coefficients have tended to counteract some of the positive benefits of labor savings for most sectors. The effects on changes in labor productivity of technology change and changes in the use of imports have been comparatively negligible and any variation in their sectoral effects have been waning over time.     

Productivity and Labor Density: Agglomeration Effects over Time

This paper studies whether agglomeration benefits a clustering region through increased labor productivity by uniquely analyzing agglomeration effects in ecology oriented industries in Kitakyushu, Japan. Our empirical model further extends previous work by introducing a time dimension into the analysis. This enables us to incorporate technological progress and isolate the impact of interest rates on productivity. The past literature has not isolated these effects. Since our model explores whether higher productivity results from increased density over time, it provides policy implications, such as on the effects of labor immigrants and on aging communities.     

Population Aging and Housing Consumption： A Nonlinear Relationship in China

Mass migration of rural workers to cities will inevitably increase urban housing demand. However, the scale of vacant urban housing will increase in future as a result of the population aging and the rising number of empty nesters. Therefore, demographic transition may not only increase housing demand, but also increase housing supply. Using an overlapping generations model, the present paper investigates＇ the impact of demographic transition on housing consumption. We find that there is a nonlinear relationship between the elderly dependency ratio and housing consumption in China. With the deepening of population aging, housing consumption will increase; when the elderly dependency ratio reaches a turning point, housing consumption will decrease. The turning point of the nonlinear curve also depends on population mobility. A greater degree of population mobility will result in a delayed turning point. Furthermore, the turning point of the nonlinear curve will emerge when China＇s elderly dependency ratio reaches a value of 32 percent in 2025. This means that over the next decade, China should continue to increase the level of housing supply,     

中国刘易斯拐点的异象、人口红利与经济增长

中国经济由二元模式向一元模式转变过程中必然会面临刘易斯拐点问题.文章对中国的刘易斯拐点异象给出了一个理论说明,解释了“民工荒”与农村大量剩余劳动力并存现象的一个重要原因是劳动生产率的人力资本差异.本文还指出中国三十多年来之所以能通过高投资驱动经济增长主要是得益于充裕的人口红利,近几年,“民工荒”使得从表面上看人口红利行将消失,但是实际上农村大量剩余劳动力是潜在的巨额人口红利,应最大限度地加以利用,本文提出了一系列有利于将潜在人口红利转化为现实人口红利的措施,并指出短期内在无法实现经济增长方式根本性转变的条件下,充分利用人口红利的重要意义.     

Labor adjustment,productivity and output volatility: An evaluation of Japan’s Employment Adjustment Subsidy

This paper provides a quantitative examination of the impact of Japan’s Employment Adjustment Subsidy, a major employment insurance policy since 1975, on labor adjustment, productivity and output fluctuation in the iron and steel sector. A partial equilibrium industry model with heterogeneous establishments and aggregate uncertainty shows that the EAS reduces steady-state labor productivity by encouraging labor hoarding, and in some cases, preventing the exit of least efficient establishments. The EAS also reduces job flows and increases average establishment-level employment. Although the impact on productivity is roughly proportional to the size of subsidized workers in most cases, the effects of the subsidy on output and employment volatility are more than proportional. First, the subsidy can lead to a sizable increase in output fluctuations over business cycles by symmetrically increasing the output response to shocks. This result is achieved through lower output via a subsidy during unfavorable times and higher output via less time and money spent on hiring during favorable times. Second, the subsidy meets its primary objective of reduced employment volatility. The reduction can be considerable when firing costs are high.     

Aging,automation, and productivity in Korea

This paper examines the impact of aging in the Republic of Korea on productivity as measured by labor productivity or total factor productivity (TFP). It also assesses the effect of robot adoption on the relation between aging and productivity using industrial level data. We find that aging is negatively associated with labor productivity and TFP growth. This is true particularly when aging is measured by increases in shares of old workers. If aging is measured by increases in the median age of workers, the negative effect is weaker. Evidence also suggests that robot technology mitigates aging's negative effect on productivity growth, particularly when productivity is measured by TFP. However, there is no evidence that robots are more heavily adopted in aged industries. While robot technology does not directly contribute to higher productivity growth, our findings suggest that the robot adoption can alleviate the negative impact of aging by helping workers in their 50s and 60s contribute less adversly to productivity growth.     

“未富先老”与劳动力短缺

计划生育政策的成功执行和社会经济的快速发展,中国在经济发展尚处较低水平的情况下,实现了人口转变过程,过早地迎来了人口老龄化,劳动力供给出现短缺的端倪。“先老”导致的劳动力供给下降与“未富”带来的大量劳动力需求,将可能形成比较优势的真空。这种趋势对现有的经济增长方式以及相应的就业和社会保障政策提出严峻挑战。为应对劳动力短缺的局面,保持中国经济发展的可持续性,应未雨绸缪,包括最大化开发人口红利、加大人力资本积累力度、选择可持续的养老保障模式,清除劳动力流动障碍、转变经济增长方式等。     

后人口红利时代的经济增长

人口红利是指人口转变中的某一阶段出现充足供给劳动力和高储蓄率给经济带来的正面影响。人口红利之后将面临高老年人口比所导致的人口负债。本文在理论层面讨论人口转变与经济增长的关系,认为人口红利期劳动力增长和高储蓄率是经济增长的动力,人口红利期之后必须通过资本积累、技术进步和人力资源开发,才能保持可持续增长。研究了中国充分挖掘人口转变潜在贡献的现实困境,给出后人口红利时代的理性建议。     

Labour force and changing age structure in selected developed countries: a comparative study

The authors examine the effects of demographic aging and the changing age structure on the labor force in the United States, Canada, and Japan over the period from 1950 to 1980. They find that "the changing age structure and population aging have generally had a favorable effect on the proportion of labour force or crude labour force rate.... The remarkable feature was the rate effect of the female labour force, which was positive and often substantially reinforced the positive age effect.... The proportion of the female labour force soared during the 1960s and 1970s in these countries, and a dramatic convergence of male and female labour force participation rates took place."     

Elderly long-term care policy and sandwich caregivers’ time allocation between child-rearing and market labor

Using an overlapping generations model, we present analyses of public long-term care provision effects on fertility and time allocation decisions of sandwich caregivers, those caring for young children and old parents simultaneously. If the public long-term care level runs short of the necessary level, then working children must compensate for the difference by spending their time. Reportedly, about a third of university students’ parents are sandwich caregivers in Japan, although Japan has a Long-Term Care Insurance system, which is a mandatory system with universal coverage. With a rapidly aging population, demand for long-term care is predicted to increase, thereby affecting family time allocation, e.g., fertility decisions, in Japan. Results show that if public long-term care production is costly relative to family care provision, then increases in public care provision lower the fertility rate. If labor productivity in the public long-term care sector improves, then it increases the fertility rate by freeing caregivers’ time from family care provision. It will also increase social welfare. The effects on labor employment in the goods production sector are generally ambiguous because the increased public care provision requires more labor.     

人口老龄化与劳动生产率的量化关系研究

在理论分析上,将劳动生产率和人口老龄化引入索洛经济增长模型,利用数理推导得出老龄化与劳动生产率存在非线性关系。实证层面上,基于2000-2017年省级面板数据,通过面板固定效应回归以及面板门槛回归分析了老龄化对劳动生产率的影响。研究结果表明:一、老龄化与劳动生产率存在"U"型曲线关系,二者现阶段处于"U"型曲线的左侧,即现阶段老龄化降低了劳动生产率;二、当企业转型升级或生产技术增长到一定阶段,老龄化与劳动生产率就呈同方向变化;三、虽处于"U"型曲线的左侧,但老龄化对劳动生产率的反向效应并不平滑,存在门槛效应。     

Macroeconomic implications of population aging: Evidence from Japan

Population aging is an important feature of Japan’s economy, which since 2006 has become a super-aged society. Changes in the age distribution of the population have important macroeconomic implications. Using annual data for 1960–2015, this study tests whether population age shares have long run influences on domestic saving, domestic investment, real GDP, inflation, the fiscal balance, and the current account balance. Cointegration is found between each macroeconomic variable and the demographic variables, which is a key finding of the analysis. The main empirical findings from the long-run cointegrating equations are that the effects of demographic change on the macroeconomic variables are statistically significant and quite strong. Alternative variants of the United Nation’s population projections provide further evidence of the importance of the demographic changes for Japan’s macroeconomic future. This study finds that future trends of key macroeconomic variables are not monotonic, but rather that long swings in the demographic factors produce a mixture of moderate growth periods and episodes of GDP stagnation.     

Fiscal stimulus and labor market dynamics in Japan

The paper studies the effects of fiscal expansion on the Japanese labor market. First, using a structural VAR model, we find that the unemployment rate falls and employment rises following an increase in government spending. We also find that fiscal expansion affects flows in and out of unemployment. While an increase in government spending increases the job-finding rate, it reduces the separation rate. We then incorporate search and matching frictions into a standard dynamic general equilibrium model, and study whether the model can explain what we observed in data. While the model fails to predict the exact size of the impact of government spending shocks on the Japanese labor market variables, it can consistently capture the empirical pattern of responses of labor market variables to shocks.     

The effects of demographic changes on the real interest rate in Japan

What are the effects of demographic changes on the real interest rate in Japan? We present a dynamic general equilibrium model in which demographic changes are captured by exogenous changes in the ratio of workers to the total population. Our model predicts that a decline in this ratio in the process of population aging lowers the real interest rate; and the demographic impact on the real interest rate is amplified by a fall in land prices in the presence of collateral constraints. The model is simulated with the realized and forecasted changes in the working-age population ratio, the TFP growth, and government spending in Japan. Our results indicate that the TFP growth is the main source of variations in the real interest rate, but the demographic factor is also quantitatively important especially for its long-term movements.     

Fertility and maternal labor supply in Japan: Conflicting policy goals?

Using panel data on Japanese mothers, this paper estimates the impact of fertility on maternal labor supply using twins as an instrument for the total number of children. We find that having twins actually has a longer term positive impact on maternal labor force participation in Japan. To understand this result, we present evidence that the effects of age and cost of children can generate this finding, are particularly salient in Japan and differ in important ways between twins and non-twin families of the same size. Implications for fertility and labor supply policy in Japan are discussed.     

The supply of labor time for mature females

Conclusions Overall, the evidence indicates that women view their leisure time as a normal good. The responsiveness in supply to changes in asset income is small.For females with spouse present, their time is a gross complement with respect to their spouse's time if the spouse's labor supply curve has negative slope. Simultaneously, the spouses' times appear to be net substitutes.There is evidence in both survey years of a backward bending labor supply curve for females. While most females remain on that part of their supply curve which has positive slope, females, particularly those with no spouse present, seem to be moving toward the backward bending segment of that curve over time. It seems that both females with and without spouse present will be behaving more like their male counterparts over time.This study evolved from a Department of Labor grant (Contract No. J-9-E-7-0180) made to Copley International Corporation, La Jolla, California. I am grateful for the assistance provided by Steven Alan Eich in working with the massive data sets utilized for this study.