Why Japanese Workers Remain in the Labor Force So Long: Lessons for the United States?

Abstract

As part of the search for ways to increase labor force participation rates among older workers in the United States, it makes sense to take a close look at evidence from Japan, one of the few industrial countries with a substantially higher labor force participation rate among older workers, particularly men, than the United States. Based mainly on prior studies and original interview data, we first discuss five potential factors which help explain why Japanese workers remain in the labor force as long as they do: (1) perceived economic necessity; (2) the large fraction of workers who are self-employed; (3) a culture that puts a high value on remaining in the labor force throughout the life course; (4) the long healthy life expectancy; and (5) the government's role in facilitating the labor force participation of older workers. We suggest that the Japanese national cultural value on remaining economically productive well into old age clearly underlies the development of the government's legislative initiatives aiming to extend the working lives of older workers. We then outline three policy suggestions for those seeking to increase labor force participation rates among older U.S. workers: (1) increase the financial incentive to workers who remain in the labor force; (2) improve public programs designed to foster efforts by older workers to become self-employed; and (3) increase the extent of government efforts to link older workers to prospective employers.