Why Do Japanese Workers Remain in the Labor Force So Long?

John B. Williamson Masa Higo

WP#2007-11

Abstract

As part of the search for answers to questions about what could be done to increase labor force participation rates among older workers in the United States, it makes sense to take a close look at evidence from Japan, one of the few industrial countries with a higher labor force participation rate among older workers than the United States. The gap is particularly large for male workers. The focus of this study is on six factors which help explain why Japanese workers remain in the labor force as long as they do: (1) perceived economic necessity; (2) the large fraction of workers who are self-employed; (3) a culture that puts a high value on being a productive member of the paid labor force, particularly for men; (4) the government’s role in facilitating the labor force participation of older workers; (5) the long healthy life expectancy; and (6) the distinctive corporate culture’s effects on marital dynamics among older generations. Based on the evidence from Japan, three policy suggestions are outlined for those seeking to increase labor force participation rates among older U.S. workers: (1) increase the financial incentive to workers who remain in the labor force; (2) increase the extent of government efforts to link older workers to prospective employers; and (3) improve public programs designed to foster efforts by older workers to become self-employed.