| Abstract: | During the next fifty years, the absolute number of elderly in Japan will increase while the absolute number of children and persons in the working age groups will decline. The main cause of this demographic trend is low fertility, which can in turn be traced mostly to delayed and foregone marriages. Absent policy measures and sociocultural change to reduce young women's opportunity costs of marriage and childbearing, it is difficult to imagine this demographic situation changing. Policy makers have stressed the importance of keeping elderly workers in the labour force. However, the problem is not elderly labour force participation per se (which is already very high for a country with Japan's per capita income) but rather the relatively low productivity of elderly workers, who are often employed part-time, work informally in private unincorporated enterprises, etc. Reforms to Japan's public pension system, which is essentially financed on a pay as you go basis with benefits linked to wages, have not been very effective to date. Official projections call for steep increases in the payroll contribution rate. In contrast to the pension system, the Japanese health system has managed to deliver high-quality care at a relatively low cost as measured by health spending as a proportion of GDP. More must be done, however, to expand the availability of long-term disabled elderly. The article concludes with a few observations elicited for European policy makers. |
