Minutes of the FFJ-Banque de France Workshop“Economics of ageing: macroeconomics and economic policy Lessons from the Japanese experience”
14 June 2024 | 9:00 - 18:00 (Paris time)
The conference, hosted at Campus Condorcet (Aubervilliers, France), was attended by about
30 participants onsite and over 20 online. They came mainly from academia but also from
central banks, ministries, the financial community, the OECD, the Embassy of Japan in France,
and the Embassy of France in Japan.
Opening remarks
Sébastien LECHEVALIER (President of the FFJ-EHESS) welcomed the participants inCampus Condorcet, and highlighted how the conference was part of a multi-pronged research
program on the impact of ageing at FFJ-EHESS, from its macroeconomic and microeconomic
impacts discussed within the FFJ-BDF Lab to its societal and technological impacts exploredwith the INNOVCARE program.
The Ambassador of Japan in France, Makita SHIMOKAWA, used an offbeat approach toillustrate the challenges of ageing in Japan and its attention to its elderly community: at therequest of elderly care centers, food companies in Japan have developed ice-creams that do
not melt for an hour, thus allowing slowly eating older residents to enjoy one small pleasure oflife. He also welcomed research to understand to what extent the population decline currently
experienced by Japan, and soon by other similar countries, is historically unprecedented.
Laurent CLERC (Deputy DG at Banque de France) reminded the participants of thecollaboration between the BDF and the FFJ since 2015, with the organization of about 20
workshops and the financing of a year-long stay for 9 scholars on the Japanese economy. Healso remarked that demographic challenges are different for each country or region: advanced
economies are confronted with ageing and possibly population implosion, while somedeveloping economies are still confronted with the risk of population explosion.
Raphaël KELLER (Minister-counsellor at the French Embassy in Japan), highlighted withnumbers the specific ageing challenge faced by Japan, with, for example, a record low fertility
rate of 1.2 in 2023.
Overview
Brieuc MONFORT (Sophia University, Tokyo, and visiting researcher at FFJ) introduced thetwo research topics of the FFJ-BDF Lab, first on fiscal sustainability and price dynamics,covered in the first roundtable, second on innovation and human capital, covered in the secondroundtable. While Japan has a head start compared to other G7 economies in terms of theFondation France-Japon de l’EHESS
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speed and extent of ageing, all these countries should experience a significant increase in theelderly ratio to their total population and the start of population decline by 2050.
First roundtable: Ageing and macroeconomic dynamics
Charles HORIOKA (University of Kobe)’s presentation explored the “puzzle wealthdecumulation” in Japan, Italy, and a panel of European countries. While the life-cycle theory
predicts that middle-aged households should save and older households dissave, empiricalresults show that older households tend to dissave much less speedily than predicted by theory
in the case of Japan and to continue to save in the case of Europe. These discrepancies canbe explained by the differences related to saving motives (precautionary savings, bequest…)
as well by institutional features (relative generosity of the pension system, relative share ofhomeowners vs. renters).
Hiroshi INOKUMA (Bank of Japan) presented a theoretical model where a decline in
population growth has a negative impact on total factor productivity through a relative declineof the younger, more dynamic firms, and a decline of business entry. Calibrating his modelover the past half century and using projections for the next half century, he finds that current
population trends should contribute to a 0.6% decline of productivity in Japan over the entire
period and a 0.3% decline in the U.S.
R Anton BRAUN (GRIPS and CIGS)’s presentation discussed the concomitance of low
inflation, low growth, and low interest rates recently in many advanced economies, as well as
the relative ineffectiveness of monetary and fiscal policies despite massive stimuli. In his model,
ageing is a driving force of these trends, with channels ranging from the labor productivity ofworkers to the demand for liquid and illiquid assets. Confronted with an ageing shock, older
households are actually losers since they suffer from a negative wealth effect related to theprice decline of oversupplied illiquid assets. A temporary expansionary fiscal policy helps
redistribute income away from the winners, namely younger households.
During the following discussion, Urszula SZCZERBOWICZ (Banque de France) raised aquestion on assessing the role of asset prices in saving behaviors, especially the fact that stock
market prices in Japan have just returned to their pre-bubble level after a 25-year hiatus; shealso enquired about the policy options to counter the decline of TFP induced by ageing.
Noëmie LISACK (European Central Bank), focusing for her part on the third paper while
deriving insights from the other papers in the roundtable, asked about the implications of thepaper for the neutral rate as well as the optimal financing choice for the government, between
debt and taxes.

Second roundtable: Human resources and innovation
Hippolyte D'ALBIS (Paris School of Economics)’s paper evaluates the impact of demographic
variables on the French economy since 1880, with a particular focus on the contribution ofwomen’s labor supply to GDP. One of the originalities of the paper is to reconstruct nationalaccounts and national transfer accounts for the period of study. Overall, the share of womenin GDP has increased from 25% to 45% but has remained broadly flat until the 1970s despite

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some wiggles during the inter-war period. The paper also studies counterfactual scenarios,
such as holding constant the level of fertility or that of education.
Daniele ANGELINI (The University of Konstanz) focused on the relationship between ageing
and the adoption of new technologies using an OLG model: one factor, relative labor scarcity,
encourages the adoption of such technologies, while two others – namely the age/skill
composition of workers and the increase in retirement age – reduces the impact of suchtechnologies. This leads to a hump-shaped relationship between age and the adoption of newtechnologies, already evidenced in Japanese data. The paper also presents policy variants,with, for example, a reduction of pensions and a decline in labor tax, leading to an increased
adoption of new technologies.
Tomohiko MORIYAMA (Japan Institute for Labour Policy and Training) investigated theemployment rate of elderly workers in Japan: employment rates are between 65-85% for
workers in their early 60s depending on gender and remains at 15-25% for workers above 70.
These high rates are explained by economic reasons for 70% of workers above 65 but also adesire to continue to contribute socially for 33% and for health reasons for about 20% of thosesame workers. Mixing carrots and sticks, government policies have provided an incentive forworkers to work longer, by raising the mandatory retirement age and protecting job security,
but also for companies to continue to hire them, with a decline of wages by a quarter after 60.
Takeo HOSHI (The University of Tokyo) presented empirical results on the relationshipbetween ageing and productivity using a dataset of Japanese firms and CEOs during the 2010s.
The focus of the paper is on entrepreneurship rate and managerial ability, in contrast to related
papers focusing on labor supply, capital supply, or the adoption of automation technologies.
Sales and sales per worker increase with the age of the CEO before peaking between 40 and
50 years old. CEO achieve their current positions after acquiring managerial abilities, butproductivity declines later in age. Despite the hump-shape productivity with age, in the case ofJapan, ageing should mildly raise aggregate productivity while reducing output per capita.
The second roundtable was moderated by Urszula Szczerbowicz. On the underlying
assumptions about the productivity of older workers, Hugh WHITTAKER (Oxford University)
recounted an anecdote on the adoption on computer-controlled tools in Japanese and British
factories: these tools were operated by younger workers in Japan (“they are young, they canlearn from the manual”) but by older, experienced workers in Britain (“the machines areexpensive, people can be killed”). Franz WALDENBERGER (DIJ – German Institute forJapanese Studies) enquired about the satisfaction of older workers when experiencing a 25%
pay cut and asked about the policy implication of the decline of productivity induced by thedecline of entrepreneurship rate.
Special presentation: Care-led innovation, the case of elderly care in France and Japan
In a session moderated by Yuki TADA (FFJ-EHESS), Sébastien Lechevalier introduced theprogram “Innovcare”, a research program benefiting from a large financing as part of a priority
research program (“PPR Autonomie”). About 60 researchers, mostly from 18 French orJapanese institutions, are involved in this four-year program (2024-2028). The goal of theprogram is to derive actionable measures to improve the care of the very old. In Japan, theissue is particularly acute with a “care gap”, namely the shortage of care staff workers overFondation France-Japon de l’EHESS

potential needs, increasing from 150,000 now to 650,00 by 2040. The hoped-for care robots
are delivering mixed results so far; hence the need to better integrate social and technologicalprogress, an approach called “care-led innovation”.
Third roundtable: From recommendations to policies – how to implement measures to address
the ageing challenge
Sébastien Lechevalier moderated the final roundtable, which focused on policies to address
the ageing challenge, with preliminary statements followed by an open discussion.
Laurent Clerc (Banque de France) highlighted that, at face value, considerations on ageing
seem absent from a traditional monetary policy rule, such as the Taylor rule. In reality, therelations between ageing and monetary policy are manifold: impact of ageing on potential
growth, real interest rate, deflationary or inflationary pressures, flattening of the Philipps curve,
possibly feedback effects of monetary policy on demography (e.g. tighter credit conditions
delaying the decision to have a child). Overall, deflationary impact should dominate, but
appropriate supply-side policies may mitigate the impact of ageing.
Junko UENO (Embassy of Japan in France) reported on the ongoing efforts of the Japanese
government to ensure the sustainability of the social security system. Public age-related
expenditures in Japan (healthcare, long-term care, public pension) have tripled over the past
thirty years. To ensure fairness between generations, the government is taking measures toraise the co-payment rate of the elderly, conditional on income, and to improve the environment
to facilitate childrearing, through higher child allowances or changes in the social or workconditions.
Shruti SINGH (OCDE) presented the recently released OECD report on “Ageing andemployment policies: working better with age”. France and Japan are almost polar opposites
in terms of the share of employed workers in the 60–64-year-old age bracket, with respectively
40% and 75%. Strategies to increase older labor force participation rest on two pillars:“encouraging employers to retain and hire older workers; promoting employment throughout
working lives”. The diversity of approaches explored by OCDE countries demonstrates
possibilities to make labor markets more inclusive for older workers. The success of thosepolicies requires coordination between governments, social partners, and civil society.
Takeo Hoshi (University of Tokyo) insisted on the need to design robust institutions: PAYG
(pay-as-you-go) systems are sound when the population is growing but come under stresswith ageing; similarly, given that demographic projections are subject to errors, social
institutions should be robust to such errors. He also insisted that ageing should be considered
not just as a challenge but also as a benefit, with people living longer and healthier.
Closing remarks
Arthur SOGNO-PEES (Banque de France) noticed that the workshop illustrated thecommonalities within advanced economies confronted with ageing. Quoting the Frenchdemographer Alfred Sauvy, he reminded that “demography takes its revenge on those whoignore her”. Ageing is not just a challenge, but also an impetus for change, as illustrated by

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novel efforts of some local governments in Japan to attract foreign workers and curb ruraldepopulation.
Sébastien Lechevalier concluded by thanking the participants and reminded that the FFJBDF workshop in Paris was the first part of a year-long research program, with a second
conference scheduled for December 2d in Tokyo. Ending on a positive note, he concurred withnumerous participants in the final open discussion that ageing is not just a challenge but alsoa blessing.

List of papers presented
First round table:• Charles Horioka, The Saving Behavior of the Elderly in Japan and Europe• Hiroshi Inokuma (jointly with Juan Sanchez), From Population Growth to TFP Growth• R Anton Braun (jointly with Daisuke Ikeda), Why Ageing Induces Deflation and Secular
Second round table:• Hippolyte d’Albis (jointly with Montserrat Botey and Miguel Sanchez-Romeno), Working
Women in France: An Economic Assessment since 1880
• Tomohiko Moriyama, Why Does the Older Population in Japan Work So Much?
• Takeo Hoshi (jointly with Naomi Kodama and Huiyu Li, The Effect of Ageing on
Entrepreneurship and Aggregate Productivity• Daniele Angelini, Ageing Population and Technology Adoption
Detailed programme
http://ffj.ehess.fr/upload/Actualites/Events/2024/14-06-2024_Programme.pdf
Staff of the FFJ involved in the event
Céline Caliaro (program coordinator); Fabien Michel; Nour Ait-Mesbah.

Sponsors of the event

Fondation France-Japon de l’EHESS