Demographic Aging and Fiscal Sustainability in Japan: What to Tackle? Social Security Reform and Macroeconomic Projection

The French Chamber of Commerce and Industry in Japan is pleased to invite you to the next lunch seminar of the French Research Institute on Japan on Friday, January 25.

Japan leads all advanced economies in terms of aging and has the highest debt to GDP ratio. A rapid rise in government expenditures is expected during the next decades as the waves of baby boomers reach the retirement age.

A macroeconomic model of multiple generations is constructed, which incorporates details of the social insurance programs (public pension, health and long-term care insurance) and demographic projections. The model is simulated to project the path of macroeconomic and fiscal variables and to explore what needs to be done to achieve fiscal sustainability.

Although no single policy tool will be enough to achieve fiscal consolidation, a combination of policies could reduce the debt level significantly. Key factors include an increase in the retirement age, policies to propel female employment and earnings to the levels of their male counterparts, and a further increase in the consumption tax rate.

About the speaker

Sagiri KITAO graduated from Waseda University in 1996. She worked for Goldman Sachs in 1996-1999, and then took her Master's degree in Public Administration / International Development from Harvard Kennedy School in 2001, and her Ph.D. from New York University in 2007.

She served as Assistant Professor at the University of Southern California (2007-2009), Senior Economist at the Federal Reserve Bank of New York (2009-2011), Associate Professor at City University of New York (2011-2015), and Professor at the Faculty of Economics of Keio University (2015-2018).

Since 2018, she is Professor at the Graduate School of Economics of the University of Tokyo. She is also research associate of the National Bureau of Economic Research (USA) and the Research Institute of Economy, Trade and Industry (Japan).

She was awarded the Nakahara Prize in 2016, becoming the first woman receiving the prize (The Nakahara Prize is an annual award given by the Japanese Economic Association to Japanese economists under the age of 45 whose work has gained international recognition).

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