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Japan’s anti-retirement miracle


The graph above shows real GDP growth for two countries, Japan and the United States. It’s pretty clear the U.S. growth rate has consistently been higher than Japan’s. (Recently, there have been only a few quarters where Japan has higher growth.) But can we really compare these two growth rates? One important difference between the two countries is that the U.S. population is growing while Japan’s is stagnant, if not declining.

The second graph shows GDP growth adjusted by the working age population—that is, the growth rate of GDP less the growth rate of the working age population. Now the story is different: Japan performs better than the U.S. in most quarters.

How does Japan do it? One way is through increasing its labor force participation, which the third graph shows. More women in Japan have joined the labor force, and more older people are staying in the labor force. This latter point is especially important for Japan, which has one of the oldest populations (if not the oldest) in the world.

How these graphs were created: For the first graph, search for Japan real GDP, select the series, and click on “Add to Graph.” From the “Edit Graph” panel, add a line by searching for “real GDP,” select as units “percent change from previous year,” and click “Apply to all.” For the second graph, take the first and for each line add a series by searching for “working age population 15-64,” choose units “percent change from previous year,” and apply formula a-b. For the third graph, search for “employment rate 15-64” and the two series should be among your top choices. For all graphs, adjust the sample period to start when both series are available.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: GDPC1, JPNRGDPEXP, LFWA64TTJPM647S, LFWA64TTUSM647S, LREM64TTJPA156N, LREM64TTUSM156S


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