Leading Regional Economist Gives Timely Insight into Aging & the Economy
SEOUL, April 26, 2013 – The Asia Society Korea Center had the honor of hosting Mr. Kosuke Motani, the Chief Economist of the Japan Research Institute, during its April Monthly Luncheon. In his lecture titled “Aging and Its Impact on Economy: What is going on in Japan and what Korea faces to,” Mr. Motani explored the intricate relationship between an aging population and a nation’s economy. By analyzing demographical patterns in Japan, he was able to present a comparison to Korea’s situation as well as valuable insights for its future.
As the world’s most aged society, Japan is an effective case study for other East Asian countries on a similar demographical trajectory of population aging. Japan’s working age population experienced a peak 18 years ago at 87 million people, which then steadily declined as the birth rate dropped. Due to the decline in the working age population, the number of those who had work also decreased. After World War II and before 1995, every five years there was an increase in those who had work. In other words, every five years those who reached the age of 15 surpassed those who reached the age of 65. Mr. Motani explained that this was the true demographical factor that impacted the number of jobs created in the economy. He pointed to the statistics showing that after 1995, when the working age population dropped, the number of jobs also began falling.
The conclusion that Mr. Motani reached through his analysis was that fewer jobs was not the result of poor economic policy, but that it was a natural result of a smaller working age population. He proposed that there was a perfect correlation between the working age population and jobs. When there are more people at 15 years of age than 65 years of age, there are more jobs. The opposite is true when there are more people at 65 years of age in society.
Mr. Motani went on to examine what this meant for South Korea, another East Asian country that is the second most aged society in the world. Like Japan, Korea also experienced a peak in the working age population, which is now decreasing. However, the difference between the two countries is that Korea still has a large working age population and not as many seniors, indicating that the majority of the society is still below 50 years of age. Mr. Motani explained that the Korean government’s own statistics show that its population numbers are equivalent to Japan’s 20 years ago and are projected to catch up to or surpass Japan. In 50 years, Korea may be looking at the same demographical and social issues that Japan is currently facing.
Japan has been coping by adopting new technology including automation and robots, which increased productivity and exports. Nonetheless, Mr. Motani explained that Japan’s large elderly population has a tendency to save money instead of consuming. Coupled with the world’s longest life expectancy, this has posed a unique challenge to improving the economy. Mr. Motani concluded his lecture with four major recommendations that he proposed for Japan, which may offer lessons to Korea and other East Asian countries facing a similar situation in the future. These recommendations included accelerating the passing on of inheritances to the younger generation through tax incentives; enabling more women to work while raising their wages; increasing the number of foreign travelers; and reforming the pension and medical systems for senior citizens.
To view the slides accompanying Mr. Motani's lecture, please visit this link: