Household Debt and Aging in Japan

22 Pages Posted: 5 Dec 2019

See all articles by Charles Yuji Horioka

Charles Yuji Horioka

Kobe University; National Bureau of Economic Research; Asian Growth Research Institute; Osaka University

Yoko Niimi

Doshisha University; Asian Growth Research Institute

Date Written: November 15, 2019

Abstract

In this paper, we analyze the borrowing behavior of Japanese households in comparison to the other Group of Seven (G7) countries and also broken down by the age group of the household head. We find that pre-retirement households (households with a head in the 50-59 age group) in Japan do not have inordinate amounts of debt and that their financial health is satisfactory. However, we also find that households with a head in the 30-39 age group have shown a sharp increase in debt holdings in recent years, due partly to the fact that tax breaks for housing purchase, reforms in the housing loan market since the early 2000s, and expansionary monetary policy enabled Japanese households to purchase housing at a younger age than they could previously. We therefore need to monitor the borrowing behavior of this cohort over time as the Bank of Japan normalizes its monetary policy, especially since households have become more vulnerable to rising interest rates as the share of households who have chosen variable-rate housing loans has increased in recent years.

Keywords: aging, borrowing, debt, homeownership, households, housing, Japan, liabilities, loans, mortgages, retirement

JEL Classification: D14, E21, G51, J14, R21

Suggested Citation

Horioka, Charles Yuji and Niimi, Yoko, Household Debt and Aging in Japan (November 15, 2019). ISER DP No. 1068, Wharton Pension Research Council Working Paper No. 2019-17, Available at SSRN: https://ssrn.com/abstract=3489652 or http://dx.doi.org/10.2139/ssrn.3489652

Charles Yuji Horioka (Contact Author)

Kobe University ( email )

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Osaka University ( email )

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Yoko Niimi

Doshisha University ( email )

Imadegawa-agaru, Shinmachi-dori, Kamigyo-ku
Kyoto, Kyoto 602-0047
Japan

Asian Growth Research Institute ( email )

11-4 Ohtemachi, Kokurakita-ku
Kitakyushu, Fukuoka 803-0814
Japan

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