in contrast, now - flourishing platform businesses, by virtue of being easily scalable, will not be hiring too many workers even if they grow rapidly in terms of sales. thus, the end result is a headwind in the labor market. 2. 4. globalization ict also influences globalization, which in turn affects developments in the labor and product markets. as is widely recognized, ict has been one of the driving forces behind globalization. it has greatly reduced the cost of communicating and coordinating across borders. coupled with the integration of former communist bloc countries into the global trading system, the horizon has broadened considerably for locating business operations. not only can firms now create networks across borders in order to attain maximum aggregate output at minimum cost, but they can also change them easily as conditions change in various corners of the world. if you have chance to look closely at the content of your wardrobe, you will be surprised by the wide variety of the countries of origin, even for seemingly similar items from the same brand. a fashion brand may design a t - shirt, but it contracts out the production to specialized factories around the world. the multitude of countries of origin on the labels shows that brands are certainly not shy of taking advantage of an offer from a factory in dhaka to make a t - shirt more cheaply than a factory in shenzhen. such practices put competitive pressure on wages across borders, and contribute to the polarization of wages, because the benefit of increased profitability would accrue mostly to top management or highly - skilled professional workers. meanwhile, some multinational firms might go one step further and directly play one country ’ s workers against another ’ s. these bis central bankers ’ speeches firms might threaten to leave a country and reestablish themselves in another with cheaper wages, thereby extracting concessions from existing workers. this would exacerbate polarization by lowering the wages paid to manual labor or low - skilled workers. now, i am about to conclude my discussion of demographic trends, balance - sheet adjustment, and the influence of information and communication technology, so before i move on to the next part, i would like to summarize where i think we are. first of all, a period of low trend growth is probably here to stay for some time, together with rigidities that may become more entrenched. it is a problematic combination of factors that could reinforce each other. secondly, in such a state, economies would be more vulnerable to occasional downward shocks. that could exacerba

of population, who are dependent on the working - age population. the inverse dependency ratio shows how many independent working - age persons have to provide for one dependent person ( in the form of pensions and expenditure on children ). the two humps in the graphs reflect the post - world war ii baby boom : the first hump appeared as the boomers reached working age, and the second as the children of boomers reached working age while the boomers themselves had not yet retired. the pink and green lines show real estate prices and the amount of bank loans outstanding respectively, both adjusted for inflation and on a scale where the peak level equals 100. the striking feature of these graphs is that in both japan and the united states, the peaks in real estate prices and loans have more or less coincided with the peaks in the inverse dependency ratio. the actual peaks are about 15 years apart between japan and the united states, but the pattern is surprisingly synchronous. similar experiences are observed in other countries as well. there are several empirical studies, employing multi - country panel analyses, which conclude that demographic changes have a significant effect on economic variables, such as property prices and long - term interest rates. 3 this comes as no surprise since, in the population dividend phase, young baby boomers want to buy more land and save more real money for their retirement. since the supply of land is physically limited, the real price of land will go up. similarly, if nominal money supply is held constant, the “ price ” of real money holdings, which is the inverse of the price level, should also go up, implying deflation. being mandated to maintain price stability, the central bank is then likely to increase nominal money to keep prices stable. the result is an increase in property prices while general price levels remain stable. 4 at the same time, i should also stress that demography alone does not explain the formation and bursting of asset bubbles. for example, excessive optimism, or the “ this - time - is - different ” syndrome is also an important contributing factor. meanwhile, demography makes a lot of difference when a bubble bursts. generally speaking, the effects are expected to be much more pronounced under the demographic onus of an ageing population rather than the demographic bonus of a young and growing for property prices see, for example, takats, ellod ( 2012 ), “ aging and house prices ”, journal of housing economics, vol 21, no 2, june, pp.