In 1994, the Law Concerning Stabilization of Employment for Older Persons was further revised. Based upon the 1994 revisions, all businesses were compelled to raise their retirement age to 60 and beyond by the end of March 1998. Effective in April 1998, workers who are forced to retire before age 60 are allowed to sue their employers.
The foregoing discussion clearly indicates that numerous programs have been initiated and measures taken by the government to make the transition to a mandatory retirement age above age 60 less difficult. The future directions of these labor market-oriented policies and programs are closely linked, however, with the evolution of public pension policies. Younger workers are now voicing an increasing concern about the adverse effect of the extension of the mandatory retirement age limit upon their future promotional opportunities within their firms.
2. Japan's Future Aging Process and Its Uniqueness
In the early 1980s, a macroeconomic-demographic-social security model for Japan was developed by the Nihon University Population Research Institute (the NUPRI model, hereafter). Since then, the NUPRI model has been periodically expanded and updated. The NUPRI model consists of the following three submodels： the population submodel, the economic submodel, and the social security submodel. As displayed in Figure 4, these three submodels are interdependent; the population submodel is first determined by a set of economic and social security variables with a one-year lag, and the variables in both economic and social security submodels are simultaneously determined, using the computed demographic variables.
The NUPRI model is of a Keynesian nature, incorporating both price and wage adjustment mechanisms to solve the system for each year of simulation. It should be noted that both fertility and mortality are endogenously determined within the macroeconomic-demographic-social security model. The fertility level for each year is estimated from a fertility model of the new home economics approach (Butz and Ward, 1979; Ogawa and Mason, 1986). As regards mortality, the expectation of life at birth for each sex is computed as a function of the one-year lagged per capita government medical expenditure measured in real terms.
