Index Investing News
Sunday, May 25, 2025
No Result
View All Result
  • Login
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
No Result
View All Result
Index Investing News
No Result
View All Result

Demographics are Not Japan’s Problem

by Index Investing News
October 24, 2023
in Economy
Reading Time: 2 mins read
A A
0
Home Economy
Share on FacebookShare on Twitter


…and never were.

It has become conventional wisdom among economists that demographics are Japan’s underlying problem. Demographics are blamed for everything from slow growth to zero interest rates to deflation. But demographics are not and never were Japan’s problem.  Japan may represent “the future”, but are we drawing the right lessons?

The demographics hypothesis does have a sort of superficial plausibility. Japan’s population grew 12.5% between 1974 and 1991, and then only 3.0% from 1991 to 2012. Japan’s total employment grew 23.6 % between December 1974 and December 1991, and then actually fell by 2.4% over the following 21 years. Thus as population growth slowed, employment growth slowed even more dramatically. At the time, people assumed that an aging population was the culprit.

But when the Abe administration took office at the beginning of 2013, everything changed. Employment soared by 8.1% between December 2012 and November 2019, and yet the demographics actually got far worse.

Population is now actually falling, and at an accelerating rate.

In addition to a falling population, Japan also has an aging population.  But that “problem” actually got worse after 2012, so it doesn’t explain the dramatic employment shifts.  I use scare quotes, as I’m not convinced that an aging population is actually a problem, at least by conventional metrics.  If adults work on average during 75% of their expected adult lifespan, it really shouldn’t matter whether the life expectancy is 80, 180, or 580 years.

Many people (including me a few years ago) assumed that as Japan got older the Japanese would continue to stop working at the same age.  But that doesn’t seem to have been the case, and thus the number of available bodies in Japan has risen much more than expected.  That reflects both better health and less strenuous jobs.

(In the US, the employment/population ratio for age 55-64 and has hit all time high, while the ratio for over-65 group peaked in late 2019.)

It’s now clear that demographics never were Japan’s problem.  Once monetary policy became a bit more expansionary, prices began rising and employment rose much faster than expected.  Demographics may partly explain the low real interest rate in Japan, but the nominal rate is mostly determined by the trend rate of inflation, i.e. monetary policy.

In the future, demographics may be a problem for specific countries such as Italy, but only if they choose to make it a problem.  There’s no reason to keep the retirement age at 62 as life expectancy rises sharply and jobs get softer.  We may choose (in public pension plans) to allow the elderly to enjoy some extra years of retirement as we get richer, but there’s no reason for years spent in retirement to rise one for one with life expectancy.  Japan is showing that there’s another way.



Source link

Tags: DemographicsJapansproblem
ShareTweetShareShare
Previous Post

Is Iran’s ‘Ring of Fire’ Strategy Heating Up?

Next Post

How Does A Christmas Club Account Work?

Related Posts

How is the Federal Reserve reacting to Donald Trump’s commerce conflict?

How is the Federal Reserve reacting to Donald Trump’s commerce conflict?

by Index Investing News
May 25, 2025
0

Unlock the White Home Watch publication at no costYour information to what Trump’s second time period means for Washington, enterprise...

SoftBank’s Masayoshi Son floats thought of US-Japan sovereign wealth fund

SoftBank’s Masayoshi Son floats thought of US-Japan sovereign wealth fund

by Index Investing News
May 25, 2025
0

Unlock the White Home Watch e-newsletter without costYour information to what Trump’s second time period means for Washington, enterprise and...

Donald Trump makes dangerous guess by rekindling his commerce conflict with the EU

Donald Trump makes dangerous guess by rekindling his commerce conflict with the EU

by Index Investing News
May 24, 2025
0

Donald Trump likes to make offers. And he could also be calculating that his sudden escalation of tariffs on the...

The Fed’s not making a revenue

The Fed’s not making a revenue

by Index Investing News
May 24, 2025
0

Unlock the Editor’s Digest free of chargeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.The...

Trump’s subsequent 100 days

Trump’s subsequent 100 days

by Index Investing News
May 24, 2025
0

This week, Swamp Notes goes to London for a dwell recording. Katie Martin, host of the Unhedged podcast, and Chris...

Next Post
How Does A Christmas Club Account Work?

How Does A Christmas Club Account Work?

CySEC Prolongs FTX License Suspension until March 2024

CySEC Prolongs FTX License Suspension until March 2024

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED

‘Dealing With Dad’ Review: A Family Dysfunction

‘Dealing With Dad’ Review: A Family Dysfunction

May 9, 2023
Dani Alves – from 43 trophies to four years in prison

Dani Alves – from 43 trophies to four years in prison

February 24, 2024
Marcus Jordan Says Dad Michael Jordan Hasn’t Met ‘Any’ Of His Girlfriends, Including Larsa Pippen

Marcus Jordan Says Dad Michael Jordan Hasn’t Met ‘Any’ Of His Girlfriends, Including Larsa Pippen

February 22, 2024
East Loop Workplace Tower Finds Financing in Chicago

East Loop Workplace Tower Finds Financing in Chicago

January 7, 2025
Crypto Exchange Kraken Settles With Treasury Department Over Sanctions Violations – Regulation Bitcoin News

Crypto Exchange Kraken Settles With Treasury Department Over Sanctions Violations – Regulation Bitcoin News

November 30, 2022
Mexico shares greater at shut of commerce; S&P/BMV IPC up 0.98% By Investing.com

Mexico shares greater at shut of commerce; S&P/BMV IPC up 0.98% By Investing.com

September 2, 2024
XRP Price Jumps 5% as SEC Backtracks in Ripple Lawsuit

XRP Price Jumps 5% as SEC Backtracks in Ripple Lawsuit

October 20, 2023
Good morning, Mogadishu! Preserving Somalia’s cultural history, one tape at a time — Global Issues

Good morning, Mogadishu! Preserving Somalia’s cultural history, one tape at a time — Global Issues

December 25, 2023
Index Investing News

Get the latest news and follow the coverage of Investing, World News, Stocks, Market Analysis, Business & Financial News, and more from the top trusted sources.

  • 1717575246.7
  • Browse the latest news about investing and more
  • Contact us
  • Cookie Privacy Policy
  • Disclaimer
  • DMCA
  • Privacy Policy
  • Terms and Conditions
  • xtw18387b488

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In