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Extending Working Lives in Japan: Evidence and Lessons from an Outlier

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Listed:
  • Hippolyte D’albis

    (ESSEC Business School, THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université)

  • Mélika Ben Salem

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)

  • Ekrame Boubtane

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris)

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 labor 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 labor 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

  • Hippolyte D’albis & Mélika Ben Salem & Ekrame Boubtane, 2026. "Extending Working Lives in Japan: Evidence and Lessons from an Outlier," PSE Working Papers halshs-05666786, HAL.
    • Handle: RePEc:hal:psewpa:halshs-05666786
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-05666786v1
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