Japan's unprecedented aging and changing intergenerational transfers

Abstract

This paper analyzes some of the important aspects of Japan's unprecedented population aging on its postwar economy, by drawing heavily upon the computed results of the NTA-Japan project, ranging from the first and second demographic dividends to the lifestyle reallocations. We also shed light on the rapidly changing roles of public and familial support systems for the elderly in Japan, that have evolved together with the family organizational transformation and the rapid development of the social security system over the past several decades.One of the principal findings of this paper is that an effective use of the demographic dividends, particularly the accumulated second demographic dividend which is likely to remain substantial for the next few decades, appears to be an attractive policy option for Japan to place its future economic growth on a steady path. Another important finding derived from this study is that, since the bursting of the bubble economy in the early 1990s, Japanese elderly persons have been informally playing the role of the society's safety net in providing financial assistance to their adult children and/or grandchildren through the traditional familial transfer mechanism.