TOE Alert: Is Japan's Potential Growth Really Just 0.5%, Part 2

Headline

Moreover, most of the increase in labor force participation comes from increased participation by women.

Abstract

Key points:

·       Potential GDP growth depends on trend growth in work-hours as well growth in labor productivity, i.e. growth in GDP per work-hour

·       Hours have been declining ever since 1990 and so productivity growth has been the sole source of overall GDP growth

·       Even though the number of jobs is back up to where it was in 2000, the aggregate number of hours is still down 9% from where it was in 2000

·       The reason is that all of the job increase since 1994 has been for part-time and temporary jobs, which means fewer work-hours per year

·       Abe says the answer is having more women and elderly work

·       However, even though a larger share of people aged 20-64 are in the labor force, the decline in the number of such people has more than offset this increase in labor participation

·       Moreover, the increase in labor participation by women has come at the expense of bearing children; today’s apparent solution is worsening tomorrow’s problem

·       Little is being done to enable women to have both career and children

·       The decline in the aggregate number of work-hours mirrors (with a lag) the decline in the number of people in the core working age: 20-59