How Japan and the Us Can Reduce the Stress of Aging

27 Pages Posted: 25 Jul 2016 Last revised: 22 Aug 2016

See all articles by Claudia Goldin

Claudia Goldin

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 2016

Abstract

The Japanese are becoming older. Americans are also becoming older. Demographic stress in Japan, measured by the dependency ratio (DR), is currently about 0.64. In the immediate pre-WWII era it was even higher because Japan’s total fertility rate (TFR) was in the 4 to 5 range. As the TFR began to decline in the post-WWII era, the DR fell and hit a nadir of 0.44 in 1990. But further declining fertility and rising life expectancy caused the DR to shoot up after 1995.In this short note I simulate the DR under various conditions and make comparisons with the US. Japan has experienced a large increase in its DR because its fertility rate is low, its people are long lived and it has little immigration. Fertility is the largest of the contributors in Japan. If there are no demographic changes in Japan, the DR will be 0.88 by 2050. I also assess the role of the “baby boom” of the late 1940s and show that it was compensatory, unlike that in the US. The good news is that healthier older longer-lived people will continue to be employed for many more years than previously and that is one way to reduce demographic stress.

Suggested Citation

Goldin, Claudia, How Japan and the Us Can Reduce the Stress of Aging (July 2016). NBER Working Paper No. w22445. Available at SSRN: https://ssrn.com/abstract=2813913

Claudia Goldin (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-3934 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-0356 (Phone)
617-868-2742 (Fax)

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