The postwar period saw the continuous growth of Japanese economy over the long term from the period of postwar reconstruction, rapid economic growth, and bubble economy, coupled with an increasing population. In the past 50 years there has been a major shift in Japan's population structure.

With respect to Japanese worker's lifestyles in the same period, from about 1960 to the first half of the 1970s, both real and disposable incomes grew significantly in line with rapid economic growth. At that time possession of the so-called "three holy durables", or "3Cs" became commonplace in ordinary households.

In addition, with the acceleration of changes in industrial structure, Japan shifted from being a nation of primary industries to one of secondary and tertiary industries.

With this shift in economic development Japan established a good social security system, which includes medical and healthcare services, and achieved the world's highest rate of longevity. However, it also faces the problems of having the lowest birthrate in the world. This could be the result of the increasing numbers of unmarried women or women getting married later, and the diversification of values. The population, which had continued increasing after the war, is now anticipated to peak in 2006, after which the population is expected to decline.

## (Postwar Population Change and Economic Growth)

With respect to the changes in population structure, the proportion of elderly (over 65) in the population continued increasing throughout the postwar period, and in 1997, it exceeded the proportion of youth (less than 15). The proportion of productive population (between 15 and 65) reached a peak in 1992, and then started to decline. Given this situation, the over-15 labour force also peaked in 1998, and then started to fall (Figure 18). Assuming that this trend will continue, as a result of aging and declining birthrate, a decrease in population will be inevitable, which gives rise to serious concerns about the future of Japan's economy.

When looking at economic growth since 1960 in terms of the level of contribution made by capital, labour, and total factor productivity, capital contribution continued to make a positive contribution after it reached a peak in 1970. Total factor productivity also remained a positive contributor to economic growth at this time. The contribution from labour, on the other hand, turned negative in 1995 and after, creating concern over the negative impacts on real GDP growth, which a serious decline in labour force together with population decrease might cause (Figure 19).

In terms of the effects of the changes in the quality of labour and the number of workers on economic growth, and when looking at the index of the number of employed person taking account of labour quality decline in the increase rate of labour quality and accelerated decrease in the number of workers led to a sharp contraction in growth. Given the declining number of workers, boosted by the retirement of baby-boomers, it is critical to raise the quality of labour in order to maintain the pace of economic growth (Figure 20).

The MOF's "Financial Statements Statistics of Corporations Industries Quarterly" indicated that the labour share (the share of corporate gross added value) was showing a long-term increasing trend, but after 1998, when it reached a peak, this became a modest downward trend, providing a 66% share in 2004.

## (Changes in Worker's Lifestyles and Household Spending)

With respect to worker's lifestyles, both income and disposable income grew significantly in line with a rapid economic growth from 1960 to the first half of the 1970s, when possession of the so-called "three holy durables", or "3C's", became common among ordinary households. Income and disposable income both continued to rise until 1995, then fell for a few years; they moved back to an upward trend in 2004.