Meeting fiscal challenges in Japan’s rapidly ageing society

Abstract

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2  ECO/WKP(2019)38 MEETING FISCAL CHALLENGES IN JAPAN'S RAPIDLY AGEING SOCIETY Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works. Comments on Working Papers are welcomed, and may be sent to the Economics Department, OECD,

Addressing demographic headwinds in Japan: A long-term perspective

“…Empirical studies show that the spousal deduction encourages women to limit their earnings to that threshold (Yokoyama, 2018). Most of the spousal deductions for the main earner went to high-income households, while less than onefifth of those with earnings below the average wage benefited from it in 2016 (Jones and Seitani, 2019).…”

“…Firms hire new graduates with the promise of a job until the mandatory retirement age. The long-term commitment encourages employers to invest in their workers to develop company-specific skills, thus raising firms' competitiveness and productivity (Jones and Seitani, 2019). Wages rise steeply with seniority, particularly in large firms and for men and workers with tertiary education, until mandatory retirement (Figure 29).…”

“…However, foreign trainees who complete three years of Technical Intern Training in Japan can change their status to category (i) without taking the exams, giving them up to eight years in Japan, though without their family. The Specified Skilled Worker (ii) category initially applied to those with "expert skills" in only two sectors -construction and shipbuilding (Jones and Seitani, 2019). In June 2023, the government opened the Specified Skilled Workers (ii) category to each of the business lines opened to category (i), except nursing care.…”