## ABSTRACT

This study aims to examine the overall impacts of the aging of the population in Japan. The rapid process of the population aging in Japan is mainly due to the equivalently swift economic development in the postwar period. Falling fertility ratios and extending life-expectancy of the elderly are the results of the increasing family incomes and improving medical services. If appropriate policies to cope with the rising share of the elderly are taken to reform the current fiscal system and institutions, the coming aged society in Japan is not as serious as it looks today. This Keizai Bunseki includes three articles: one, macro-economic impacts of the public pension reform; two, micro-economic analysis of the elderly household; three, evaluating the effects of policies to raise the birth rate.

In the first article, we construct the long-term macro-economic model to predict Japan's economy toward the year 2050. This model is mainly based on the supply-side, particularly population, which is supplied by the National Research Institute of the Population and Social Security. The supply of the labor force up to 2050 is estimated by age, gender, and types of employment. The results of the prediction indicate that the economic growth will decelerate to below 1 percent in the average of 2025-2050 period. The fiscal deficit will be mounted, and the pension fund will be exhausted by 2050. However, if we reform the current public pension schemes by curtailing excess benefits, the contribution rates at its peak level could substantially be lowered. This will not only contribute to maintain the stability of the public pension budget, but the economic growth will recover by the higher labor force participation.

In the second article, the micro-economic aspect of the elderly living is mainly examined. The average living of the Japanese elderly is better than that of the average household on a per capita basis. However, the income disparity among the elderly group is much larger than that of the non-elderly. The elderly living is affected by whether or not the elderly live together with their married children. The extended family has an advantage of exploiting the household scale economy, and the household labor force participation as well as the savings are stimulated. However, the co-residence ratio is likely to decline over time with an improvement of the incomes of the elderly, which may increase the uncertainty of the elderly living in near future.

The third article discusses the factors behind the falling fertility ratio, and the policies to counter it. An increase in the labor force participation of women and the improvement of their economic position is a major cause for raising the opportunity costs of child-raring. Thus, an effective policy for recovering the fertility is to ease the trade-off between women's continued employment and child-raising. Providing better nursery services both in quantity and quality is needed. With the simultaneous-equation model of women's employment, fertility, and nursery services, the recovery of the fertility in line with the official medium-estimates is possible when the provision of the nursery services is to be tripled by 2050.