Untapped Work Capacity among Old Persons and Their Potential Contribution to the First Demographic Dividend and Labor Supply in Japan
The Harvard T.H. Chan School of Public Health, the Stanford University Walter H. Shorenstein Asia-Pacific Research Center, the World Demographic & Ageing Forum and Fudan University jointly organized the 2nd Workshop on the Economics of Ageing in Shanghai at the end of May.
Assistant Professor Rikiya Matsukura, co-investigator with our project, made a presentation on the research he, and co-investigators Prof. Naohiro Ogawa and Dr. Satoshi Shimizutani recently carried out together.
The research sought to assess how many elderly people capable of working existed in Japan, where the working force is shrinking due to deep changes in the population structure, and how big the macroeconomic impact would be if they joined the labor market. To estimate the potential elderly labor force, the researchers utilized the data gathered by the Japanese Study of Aging and Retirement (JSTAR) and the estimation method used in the US National Bureau of Economic Research (NBER) project. Concretely, the method consists in estimating how many people of ages 55 to 75 whose health condition is the same as that of workers aged 50-54 exist. To estimate the macroeconomic impact that these 55 to 75 year olds who can work would have if they joined the labor market, NTA indices were used.
Furthermore, if a large number of workers of a certain generation entered workforce, it is conceivable that that would affect their own and the wages of other generations. The researchers used time series data to conduct such a simulation, and proved that the participation of the elderly would not affect the wages of other generations.
What is more, if all healthy elderly Japanese people were to enter the labor market, the study shows, that would have a fairly big impact on the Japanese economy, as the country’s GDP would rise by 4%.