2005 George Myers Memorial Lecture

H lth d it i t kHealth and its impact on work and dependency among theand dependency among the

elderly in graying Japan

Naohiro Ogawa

Nihon Universityy

Population Research institute

REVES 17 “Population Health and Health Expectancy-Policy Implications”

Total fertility rate (TFR) and ideal family size, Japan, 1947-2004

5

Birth1947-2004

4

4.5

2 5

3

3.5

1 5

2

2.5

0 5

1

1.5

0

0.5

1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003

YearIdeal number of children TFR

Trends in Period Parity Progression Ratios in Japan, 1950-2000

1000

900

1000B to M

1 to 2

M to 1

700

800

1 to 2

600

400

500

2 to 3

300

4+ to 5+

100

200

3 to 4

4+ to 5+

19501955

19601965

19701975

19801985

19901995

2000

YEAR

0

lxChange in Survival Curve Over TimeChange in Survival Curve Over Time

10

82000

61891-98

4

2

010

2030

4050

6070

8090

100110

0

10 30 50 70 90 110

Age

Change in average age of death among 50 oldest persons in Japan, by sex 1950-2002

110

oldest persons in Japan, by sex 1950 2002

106

108

104

106

Age

102

98

100

981950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

25

20

Social security benefits / National15

Social security benefits / National income

10 Pension benefits / National income

5

Medical expenditure / National income

01951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001

a o a co e

Trends in expectation for old-age security from children and the number of legal cases of parentschildren and the number of legal cases of parents suing their children for support: Japan, 1950-2004

70 300

60 250

40

50

% 150

200

ses

Cases of parents suing their children

20

30

%

100

150

Cas

Expect to rely on children

10 50

01950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

0

Sources: Supreme Court, Annual Report of Judicial Statistics, various years. Population Problems Research Council of the Mainichi Newspapers, Changing Family Norms among Japanese Women in a Era of Lowest-low Fertility 2004.

Trends in Norms and Expectations about Care for the Elderly: Japan, 1950-2004

80

90

Ca e o t e de y Japa , 950 00

"Good Custom" or "Natural Duty“

70

50

60

Expect to Depend on Children

40

％

20

30

0

10

01950 1956 1962 1968 1974 1980 1986 1992 1998 2004

Year

Proportion of those who would take care of parents under any circumstances, when their parents get older and need some

(%)

help in their daily lives due to poor health, Japan, United States and China, 2005

84

80

90

68

60

70

43

40

50

20

30

0

10

S ChiJapan U.S. ChinaSource: Japan Youth Research Institute, High School Students' Lifestyle Survey, 2005.

Age Projected life expectancy at birth95

90 NUPRI 90% confidence level

85Government

8590% confidence level

NUPRI

80

75

Government

20002005

20102015

20202025

Year

75

TFR

Projected total fertility rate, 2000-2025

1.5

Government NUPRI

1.4

1.3

1.2

1 1

2000 2005 2010 2015 2020 2025

Year

1.1

Projected total population, 2000-2025

1.28

Billion

1.26

1.27

1 24

1.25

1.23

1.24

1.21

1.22

1.19

1.2

2000 2005 2010 2015 2020 2025

Year

2000年と2025年の人口ピラミッド（推計値）

男 女

出典：日本大学人口研究所、「人口・経済・社会保障モデルによる長期展望ー人的資本に基づくアプローチ-」。

The Bottom LineThe Bottom LineRapid aging appears to be virtually certain

Life expectancy continues to riseLife expectancy continues to riseLow fertility is resistant to policy Immigration is of limited helpImmigration is of limited help

How best do we accommodate the aging of our populations?

Th St t i f R diThree Strategies for Responding to an Aging Societyto an Aging Society

Strategy 1: Retire LaterStrategy 2: Expand Transfer ProgramsStrategy 3: Accumulate Pension FundsStrategy 3: Accumulate Pension Funds

Labor force participation rates for men and women aged 65 and over in selected countries 2000

40.0

aged 65 and over in selected countries, 2000

30.0

35.0

20.0

25.0

%

5 0

10.0

15.0

0.0

5.0

Germany Italy United States France Japany y p

Countries

Men Women

Source: ILO, Yearbook of Labour Statistics, various years.

Strong Trend toward Early Retirement in WestStrong Trend toward Early Retirement in West

80

90

)

60

70

Mal

es 6

5+)

USBritainFranceGermany

40

50

60

or F

orce

(M Germany

30

40

ent i

n La

bo

10

20

Perc

e

01840 1860 1880 1900 1920 1940 1960 1980 2000

S C t 1998 T bl 2A 2Source: Costa 1998, Table 2A.2.

Labor force participation rates aged 65 and over 1960 2003

70

over, 1960-2003

50

60

40

50

20

30

10

20

01960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000

Male FemaleSource: Statistics Bureau, Ministry of Public Management, Home Affairs, Post and Telecommunications, Annual Report on the Labour Force Survey 2003.

A i i J i i th T d t dAsia is Joining the Trend toward Early RetirementEarly Retirement

4550

354045

bor

forc

e

ChinaJapan

202530

65+

in la

b JapanIndiaUnited StatesG

51015

Perc

ent 6 Germany

France

05

1950 1960 1970 1980 1990 1995

P

Note: Male and female combined.

Mandatory retirement age in Japan, by firm size, 2003

90.0

100.0

2003

70.0

80.0

50.0

60.0

%

30.0

40.0

10.0

20.0

0.05000 or more 1000-4999 300-999 100-299 30-99

Firm size

55 56-59 60 61-64 65 66 and over Others

Source: Statistics and Information Department, 2004. Minister’s Secretariat, Ministry of Health, Labour and Welfare, Survey on Employment Management, 2004.

Average age of mandatory retirement in large firms

60 0

61.0Age

59.0

60.0

57 0

58.0

56.0

57.0

54 0

55.0

53.0

54.0

1965 1975 1985 1995

Year

Trends in reasons for quitting job for persons aged 65 and over: Japan, 1950-2004

60.0

70.0

80.0

p ,

MEN

30 0

40.0

50.0

%Retirement ageHealth problems

10.0

20.0

30.0

0.01977 1982 1987 1992 1997 2002

60 0

70.0

80.0

WOMEN

40.0

50.0

60.0

%Retirement age

10.0

20.0

30.0g

Health problems

0.01977 1982 1987 1992 1997 2002

YearSource: Statistics Bureau, Ministry of Public Management, Home Affairs, Posts and Telecommunications, Employment Status Survey,

Change in retirement age at large-scale businesses and life expectancies at age 20 for men and women: Japan,life expectancies at age 20 for men and women: Japan,

1965-2002

65.0

67.0

61.0

63.0

57.0

59.0Year

53.0

55.0

49.0

51.0

1965 1970 1975 1980 1985 1990 1995 20001965 1970 1975 1980 1985 1990 1995 2000

YearRetirement age Male life expectacy at age 20 Female life expectancy at age 20

MaleMandatoryretirement

Health Personal curtailment, liquidationor bankruptcy of the company Female

Mandatoryretirement

Health Personal curtailment, liquidationor bankruptcy of the company

Reason for quitting job Reason for quitting job

55-59 55-591982 29.3 13.4 13.4 1982 11.0 24.1 10.71992 14.7 14.3 14.4 1992 8.1 19.8 10.22002 5.7 9.0 28.2 2002 3.2 12.4 20.4

60-64 60-641982 50.0 18.5 7.9 1982 18.6 37.4 5.91992 54.1 15.8 6.2 1992 25.4 24.7 7.32002 46.1 10.3 16.7 2002 23.4 16.3 16.5

65-69 65-691982 43.8 32.5 6.6 1982 14.6 57.5 5.41992 57.6 22.0 4.4 1992 26.8 36.4 5.12002 52.4 17.9 10.7 2002 27.6 24.8 11.6

% of working among those who left job by mandatory retirement55-59 55-59

1982 67.4 1982 22.11992 77.5 1992 29.62002 74.4 2002 37.7

60-64 60-641982 51.4 1982 17.21992 52.3 1992 22.92002 41.3 2002 20.7

65-69 65-691982 41.5 1982 15.81992 40.7 1992 16.32002 32.4 2002 13.6

NUJLSOANUJLSOANihon University Japan Longitudinal

Study of Aging

Survey in 1999 , 2001 and 2003

Grouping for analysis

Y = 1 if the individual was not working in 1999

Y = 2 if the individual was working in 1999 but not in 2001

Y = 3 if the individual was working in 1999 and 2001, but not in 2003

Y = 4 if the individual was working in 1999, 2001, and 2003

Labor force transition by respondents aged 65-84

Men

63% 70%1999 2001 2003

Working （37%） Working Working 38% 30

%

Not working （63%） Not working Not working

92%8%

94%

6%

Women

Working （18%） Working Working51%

49%

66%

34%

1999 2001 2003

Not working （82%） Not working Not working

96%4%

96%

4%

96% 96%

Percent of respondents with difficulty in performing NAGI index activities in 1999 2001 and 2003NAGI index activities in 1999, 2001, and 2003

Lift i t l 10k bj t

Extend arms out in front as if to shake hands

Grasp with the fingers or move the fingers easily

Lift an approximately 10kg object

Stoop or bend the knees

Raise the hands above the head

Extend arms out in front as if to shake hands

Stand continuously for 2 hours

Sit continuously for 2 hours

Stoop or bend the knees

Walk 200 to 300 meters

Climb 10 steps without resting

Stand continuously for 2 hours

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

Walk 200 to 300 meters

Percent

1999 2001 2003

Composition of respondents change by NAGI score between 1999 and 2003

Men WomenChange in NAGI score (percent) (percent)

Between 1999 and 2001Improvement 16.6 24.1N h 62 7 44 8No change 62.7 44.8Deterioration 21.7 31.1

Between 2001 and 2003Improvement 11 5 21 2Improvement 11.5 21.2No change 65.3 50.4Deterioration 23.2 28.4

Percent of respondents expecting to rely on children by age in 1999, 2001, and 2003

Year of surveyMen

y g , ,

Age 1999 2001 200365-69 27.3 27.8 22.7

y

70-74 32.3 36.8 36.075-79 39.3 43.3 40.880 84 48 6 48 5 47 280-84 48.6 48.5 47.2

Women

Age 1999 2001 2003Year of survey

Women

Age 1999 2001 200365-69 35.7 38.4 37.070-74 45.9 47.6 42.375-79 57.8 58.7 56.380-84 68.0 69.6 63.9

Men WomenPredicted mean 32.8 16.3NAGI

Estimated effect on probabilities of working in 1999

NAGI score Some difficulty 20.7 ** 11.9 ** No difficulty+ 39.0 21.1Age 65-69 42.3 ** 26.4 ** 70-74 37.1 ** 20.1 ** 75-79 29.0 * 13.1 80-84+ 24.8 11.6Education Junior high or lower+ 28.8 15.3g Senior high 36.6 ** 17.8 Univ or Junior college 43.7 ** 22.2 **Marital status & spouse's health Married and spouse is healthy 34.2 18.8 *Married and spouse is not hea 25.2 ** 13.5 Married and spouse is not hea 25.2 13.5

Not married+ 35.8 15.5Longest job Self-employed or agriculture 55.0 ** 31.6 ** Others+ 21.7 7.6Living with childLiving with child Yes 33.7 16.0 No+ 32.1 16.8Living with pre-schooler Yes 32.6 17.6

N 32 8 16 2 No+ 32.8 16.2Current residence Urban 29.8 ** 14.7 ** Rural+ 37.0 17.9Home ownership Yes 32.9 16.3 No+ 32.3 15.8Log likelihood -888.6 -809.9Sample size 1691 2280

Men Women Men WomenFrom 1999 to 2001 From 2001 to 2003

Estimated effect on probabilities of workingMen Women Men Women

Predicted mean 64.5 56.0 74.2 69.4NAGI score in 1999 Some difficulty 58.3 * 54.2 58.9 * 66.7 No difficulty+ 65.5 56.8 76.1 70.4Change in NAGI from previous survey -3 (improvement) 75.6 * 69.3 ** 95.0 ** 90.3 ** 0 (no change) 65.1 * 57.4 ** 77.8 ** 72.6 ** +3 (deterioration) 52.9 * 44.4 ** 40.6 ** 46.4 **Age 65-69 77.7 ** 69.5 ** 76.4 77.9

70-74 63 2 61 1 ** 75 8 70 8 70 74 63.2 61.1 75.8 70.8 75-79 55.2 49.1 * 73.8 67.7 80-84+ 54.5 30.7 69.4 63.2Education Junior high or lower+ 61.0 57.7 68.8 61.8 Senior high 65.8 51.8 82.9 ** 87.3 ** Univ or Junior college 75.4 ** 69.9 74.9 44.5Marital status & spouse's health Married and spouse is healthy 64.8 58.8 73.5 67.0 Married and spouse is not hea 69.6 51.0 79.9 78.8 Not married+ 57.0 55.6 72.8 67.9Longest jobLongest job Self-employed or agriculture 70.4 ** 57.9 78.3 75.3 ** Others+ 57.0 51.8 69.3 54.5Living with child Yes 69.5 ** 53.3 74.8 73.7 No+ 59.4 59.7 73.6 64.4Li i ith h lLiving with pre-schooler Yes 54.9 28.4 80.7 46.0 No+ 65.0 56.8 74.0 70.4Current residence Urban 60.7 * 59.4 73.0 78.5 ** Rural+ 68.9 52.2 75.5 61.4Home ownership Yes 63.2 * 56.8 74.4 69.7 No+ 77.8 48.0 71.9 66.5Log likelihood -242.4 -153.6 -110.2 -54.0Sample size 400 248 221 121

Estimated effect on probabilities of men working sequentially, conditional on working in the previous survey period, by region

Urban Rural Urban RuralPredicted mean 61.0 65.8 75.0 72.1NAGI score in 1999 Some difficulty 59.2 51.6 * 35.1 ** 77.4

From 1999 to 2001 From 2001 to 2003

y No difficulty+ 61.3 68.6 79.1 71.3Change in NAGI from previous survey -3 (improvement) 59.6 89.1 ** 95.2 ** 95.4 ** 0 (no change) 60.9 67.5 ** 76.9 ** 77.7 ** +3 (deterioration) 62.1 35.5 ** 38.2 ** 41.7 **Age 65-69 70.9 ** 73.9 67.2 83.0 ** 70-74 74.8 ** 48.5 ** 85.1 79.3 75-79 48.3 54.0 ** 85.5 63.2 80-84+ 42.3 78.6 87.9 54.3EducationEducation Junior high or lower+ 55.6 65.2 73.7 66.0 Senior high 63.0 65.0 77.9 88.1 ** Univ or Junior college 69.1 78.0 72.2 83.2Marital status & spouse's health Married and spouse is healthy 62.8 68.3 ** 75.5 69.7 Married and spouse is not health 52.8 71.6 ** 66.1 83.5

Not married+ 59.0 43.6 76.2 64.9Longest job Self-employed or agriculture 68.3 ** 68.8 83.2 73.8 Others+ 54.8 59.4 70.0 68.3Living with childLiving with child Yes 64.8 70.1 77.4 74.6 No+ 57.6 60.4 73.2 68.4Living with pre-schooler Yes 49.9 60.0 48.7 …

No+ 61.4 66.2 75.5 … No+ 61.4 66.2 75.5 …Home ownership Yes 58.9 65.0 75.7 … No+ 73.5 93.9 69.8 …Log likelihood -139.3 -99.3 -48.1 -44.7Sample size 228 184 100 104

Estimated effect on probabilities of expecting to depend on children for old-age security, 2001 and 2003

2001 2003Men Women Men Women

Predicted mean 38.7 57.1 37.3 53.9NAGI score in previous survey Some difficulty 42.8 61.4 ** 39.1 56.1 No difficulty+ 37.4 53.1 36.6 51.8

2001 2003

yChange in NAGI from previous survey -3 (improvement) 33.3 50.2 ** 38.8 51.5 0 (no change) 38.6 56.9 ** 37.4 53.7 +3 (deterioration) 44.2 63.4 ** 36.1 55.9Age65-69 29 8 ** 49 2 ** 22 5 ** 51 1 65 69 29.8 49.2 22.5 51.1

70-74 39.9 53.4 ** 37.2 46.5 ** 75-79 39.8 58.7 * 40.6 56.4 80-84+ 44.5 64.6 37.3 57.9Education Junior high or lower+ 43.5 59.3 41.6 58.3Senio high 36 6 * 54 9 34 9 * 47 7 ** Senior high 36.6 * 54.9 34.9 * 47.7 **

Univ or Junior college 20.2 ** 40.5 ** 22.2 ** 32.4 **Marital status & spouse's health Married and spouse is healthy 36.7 ** 52.5 ** 33.3 ** 47.5 ** Married and spouse is not hea 40.1 53.9 * 39.3 ** 54.4 Not married+ 48.3 60.9 51.7 56.6Longest job Self-employed or agriculture 41.1 65.3 ** 41.1 58.7 ** Others+ 37.4 52.3 35.2 50.9Living with child Yes 50.7 ** 67.9 ** 46.6 ** 61.9 ** No+ 26.0 41.6 28.1 42.6Living with pre-schooler Yes 35.2 66.9 40.8 67.0 No+ 38.9 56.8 37.1 53.6Current residence Urban 32.7 ** 53.5 ** 33.7 ** 49.8 **Rural+ 48 3 63 4 43 0 60 4 Rural+ 48.3 63.4 43.0 60.4

Home ownership Yes 39.7 ** 58.1 * 38.9 ** 54.8 * No+ 28.2 49.6 17.4 45.2Log likelihood -532.2 -664.7 -494.0 -629.3Sample size 998 1169 882 1042

Si l tiSimulationsUse NUPRI Model:Use NUPRI Model:

Assume Mandatory Retirement Age raisedAssume Mandatory Retirement Age raised from 60 to 65

In response, employment rates for persons 60 to 64 rise to those of persons 55 to 59p

Based on these assumptions, use NUPRI p ,model to recalculate GDP and GDP per capita

sex differential i ll t f fertility

Population submodelInterrelationship among three submodels モデルの構成

in enrollment for university education

Population by age and sex

y

mortality

labor supplylabor force participation rate

Economic submodel

income share

price wage consumption investmentprice, wage consumption, investment

employment

pension schemesMedical insurance schemes

Social security submodel

medical benefits social security benefits pension benefitstotal medical expenditure

contribution to medical schemes contribution to social insurance schemes contribution to pension schemes

Economic Projections from NUPRI Model

Item Base Case Base Case MoreItem Base Case Base Case More Older

WorkersWorkers2005 2025 2025

Real GDP(Trillion

564.7 624.8 693.8

Yen)

Real GDP 4.43 5.2 5.74Real GDP Per Capita (million

4.43 5.2 5.74

(million yen)

The Second Dividend

Life expectancy is increasingp y gStimulates the accumulation of

lthwealthMore wealth leads to aMore wealth leads to a permanent increase in income

年齢別資産プロファイル

Source: Andrew Mason (2001).

Household Financial Assets

170

190

130

15019991994

110

130

yen

70

90

mill

ion

30

50

10

10

-10 15 25 35 45 55 65 75 85 95Age of household's head

190

Real Assets

170

190

130

150

90

110

on y

en

50

70mill

io

19991994

30

50

-10

10

15 25 35 45 55 65 75 85 95

Household head's age

Lifecycle Deficit by Age, Japan, 1999 Actual and 2025 Age Distribution

4000

6000g

2000

-2000

00 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 1999

2025

-4000

-8000

-6000

Age

Future Japanese elderly persons

will be wealthier!

Elderly population by heath status Japan 2000 25

30000Thousands

Elderly population by heath status, Japan 2000-25

25000

15000

20000

10000

15000

5000

02000 2025

YearUnhealthy assistace requried Unhealthy no need help Healthy

Future Japanese elderly persons

will be

not only wealthier but alsonot only wealthier but also healthier!healthier!

Future Japanese elderly persons

will be

wealthier healthierwealthier, healthier

dand

cleverer!

Length of demographic bonus period

Singapore

Japan

Chi

Democratic People's Republic of Korea

Republic of Korea

Sri Lanka

Thailand

China

Iran (Islamic Republic of)

Mongolia

Myanmar

Indonesia

Viet Nam

1950 1970 1990 2010

Malaysia

Myanmar

2030 2050 2070

Future Japanese elderly persons

may save

Japan!Japan!