Japan

The older Japanese population is similar to other older populations around the world in that it is predominantly female, and older men are more likely to be married than older women— both patterns that are influenced by the sex differences in life expectancy. But Japan differs in two important respects—in patterns of labor force participation and of living arrangements.

In their late fifties and their sixties, Japanese men are much more likely to be working than their counterparts in other rich countries. In 1998, 85 percent of men ages fifty-five to sixty-four and 36 percent of men age sixty-five and over were in the labor force. The percentages for women were 50 and 15, respectively. In the United States, similar proportions of older women work, but older men are less likely to be in the labor force. In 1998, participation rates were only 68 percent for those ages fifty-five to sixty-four and 17 percent for those sixty-five and over. Labor force participation at older ages in most European countries is even lower. There are several possible reasons for the higher rates in Japan. Some have pointed to Japan's strong work ethic and work-group orientation. Others have emphasized the relative immaturity of the Japanese pension system until the last part of the twentieth century. Gruber and Wise have highlighted the relatively low penalty in terms of reduced pension benefits associated with continued work in Japan.

Labor force participation of the sixty-five and over population declined in Japan from 1980 to 1998, as it did in other richer countries, but the trend for the fifty-five to sixty-four population has been flat for Japanese males and upward for females. These time trends around the prime retirement ages likely reflect increases in the age of eligibility for public pensions and the efforts by the Japanese government to encourage firms to retain older workers or hire them anew.

The second significant characteristic of older Japanese is that they are much more likely to be living with their adult children than are their peers in other more developed countries. In 1990, 59 percent of the sixty-five and older population coresided with children, while 25 percent lived with spouses only, 4 percent with others, and 11 percent alone. Although the percentage coresiding is high by Western standards, it is low for Asia, where in recent decades roughly 75 percent coresidence has been the pattern. In fact, the figure for Japan in 1990 represents an 18 percentage point drop from 1970, when Japan was more typical of Asian societies. This decline in Japan likely reflects the increased survival of spouses, a change in preferences among family members for coresidence, and perhaps increased resources that allow the actualization of a preference for living apart from children. Not surprisingly, cross-sectional analysis based on Japanese data from 1988 indicate that older people with more education and a surviving spouse are less likely to live with their children than are people with less education and those who are widowed.

Hirosima's projections of living arrangements based on past trends in population, marital status, and propensity to coreside indicate that living with children will likely continue to decline to about 40 percent in 2010 with 36 percent of males coresiding and 43 percent of females doing so. The proportion living alone is expected to increase from 5 to 8 percent among males over the same period and from 15 to 16 percent among females. The biggest changes will likely be in the category of living with spouse only: from 36 to 50 percent for males and from 17 to 32 percent for females. Although coresidence is not necessary or sufficient for intergenerational support, these projections are consistent with the decline in the proportion of women of reproductive ages who expect to depend on their children once they reach old age, from 65 percent in 1950 to 18 percent in 1990.

Moreover, it would appear that on average older Japanese in the early 1990s were relatively well-off financially in comparison to younger Japanese and similar in circumstance to older people in other developed countries. As a result of a greater number of years of working and saving, it is not surprising that the net worth of older Japanese is larger than that of younger Japanese. Home ownership is an important component of wealth among older Japanese. Data from the Organization of Economic Cooperation and Development indicate that rates of home ownership among Japan's older population are over 75 percent, which is comparable to or even higher than some European countries. Of course, there is some decline in income with retirement. Even so, the ratio of income at age sixty-seven to income at age fifty-five in Japan is similar to the ratios in many European countries, about 75 to 80 percent. Public pension benefits are an important component of income for older Japanese. It remains to be seen how the bursting of the so-called bubble economy and the subsequent economic slowdown in the 1990s will ultimately affect the overall economic well-being of older Japanese, especially those at the low ends of the income and wealth distributions. Furthermore, serious questions about the future of the public pension system are a source of concern.