Retirement Transitions in Japan

Abstract

Japan has one of the world’s lowest fertility rates along with one of the highest life expectancies. Japan’s life expectancy is the highest in the world for women and among the highest for men. The prolonged period of low fertility combined with limited migration has resulted in a decline in the size of the population. Projections indicate that the Japanese population will fall from 128.1 million in 2012 to 116.6 million in 2030 and continue to decline throughout the twenty-first century. The proportion of the population age 65 and over is projected to rise from 23.0% in 2010 to 33.4% in 2035 ( National Institute of Population and Social Security Research, 2012 ) and reach 40% by the middle of the century. Low fertility combined with low mortality at older ages is producing a super aging of the Japanese population as the number of individuals 65 and over approaches the number of those age 20–64. In this environment, maintaining high levels of labor force participation among older people is essential to maintain national economic growth. Clark, Ogawa, Lee, & Matsukura (2008) and Clark, Ogawa, Kondo, & Matsukura (2010) simulated the importance of high levels of labor force participation in maintaining the real growth rate of the Japanese economy. Their results indicate that increases in the labor force participation rate of individuals age 60–64 that might accompany increases in the age of mandatory retirement in Japan would boost the gross domestic product (GDP) and GDP per capita by over 10%.

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