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Extending working lives in Japan: Evidence and lessons from an outlier

Author

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  • d’Albis, Hippolyte
  • Salem, Mélika Ben
  • Boubtane, Ekrame

Abstract

Population ageing poses major fiscal and macroeconomic challenges for OECD countries. Japan, the most rapidly ageing economy, offers a natural laboratory to study the aggregate effects of extending working lives. Using quarterly data over the period 1975Q1–2022Q4 and structural VAR models, we estimate the dynamic impact of shocks to the labour force participation of older workers. We find that higher participation has no significant effect on GDP per capita but improves the fiscal balance, while also being associated with a decline in average labour productivity. Moreover, the results reveal complementarities across both age and gender: increases in older workers’ participation are accompanied by higher participation and employment among younger cohorts, as well as a strong positive participation response among older women following an increase in older men’s participation.

Suggested Citation

  • d’Albis, Hippolyte & Salem, Mélika Ben & Boubtane, Ekrame, 2026. "Extending working lives in Japan: Evidence and lessons from an outlier," The Journal of the Economics of Ageing, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:joecag:v:34:y:2026:i:c:s2212828x26000265
    DOI: 10.1016/j.jeoa.2026.100643
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    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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