3. A Macroeconomic Scenario: Limits to the Support System for the Aged
The NUPRI model has also yielded a projection of a host of macro-economic and social security-related variables over the period 1995-2025.Among these variables, we have selected, as shown in Table 4, several keyvariables with a view to discussing some of the major impacts of popula-tion aging upon the socioeconomic system in Japan.
Although real GNP is projected to increase by 1.6 times over the 30-year period, its annual growth rate slows down over time from 2.8 percentduring 1995-2000 to 1.0 percent in the 2010s. One of the principal sources of such declining economic growth is related to the labor side. It is the first time in modern Japanese history that labor supply is expected to decrease after it reaches its peak value of 68.3 million in the year 2001. This negative growth of labor supply is induced by such factors as (i) a marked decrease in the number of new entrants due to sustained low fertility and to a further rise in educational enrollment at the tertiary level, and (ii) a continuous fall in the labor force participation rate of the elderly through an increase in the per capita pension benefit as well as reduced employment opportunities in the primary industry where many elderly workers are engaged. Although the labor force participation rate for middle-agedwomen is projected to rise considerably over the next 30 years, this positive effect is not large enough to offset the numerous negative effects on labor force growth.
It should also be noted that, though not shown in the table, hours worked per worker are projected to diminish by 6 percent during the 30year period owing to a gradual rise in real wages. If the government's goal to shorten the average annual working hours per worker to 1,800 hours, as discussed earlier, is successfully achieved in the near future, the total amount of effective labor supply will decrease at a faster rate than that computed from the model.
These projected results for labor supply, however, may be affected appreciably by a number of factors not having been explicitly incorporated in the NUPRI model. One of these factors, for instance, is related to Japanese workers' attitudes toward their own jobs. The age composition of the labor force will shift pronouncedly. In 1995, the ratio of the male labor force aged 15-24 to that aged 60 and over is roughly 0.8, but is projected to fall to 0.5 in 2009 when the baby boom cohorts reach age 60.
