THE POLITICS OF JAPANS SHIFTING Demographics B r o o k i n g s S - - PowerPoint PPT Presentation

B r o o k i n g s “ S I LV E R d e m o c r a c y ” P a n e l L E O N a r d S c h o p p a , D e c e m b e r 3 , 2 0 1 4

THE POLITICS OF JAPAN’S SHIFTING Demographics

DECLINING FERTILITY AND FALLING POPULATION

500 1,000 1,500 2,000 2,500 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 Births (in thousands)

Fewer and Fewer Babies

Source: data before 2010 from Japan Statistical Yearbook; Figures for 2011-2060 from NIPSSR 2012 Projection

• 20,000

40,000 60,000 80,000 100,000 120,000 140,000 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 Population (in thousands)

Population Projected to Lose 41 Million by 2060

THE SLOW PACE OF IMMIGRATION INTO JAPAN: NET-INFLOW OF JUST 36,000 IN 2011

Source: OECD Migration Data

118 95 115 94 80 107 122 110 35 44 36

• 300
• 200
• 100

100 200 300 400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 In T housa nds

I n-Flo ws into Ja pa n Out-F lo ws fro m Ja pa n Ne t Mig ra tio n

20,000 40,000 60,000 80,000 100,000 120,000 140,000 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 Population (in thousands) Over 75 65-74 20-64 0-19

SHIFTS IN AGE COMPOSITION OF POPULATION

SHIFTS IN AGE COMPOSITION OF ELIGIBLE VOTERS

89% 87% 82% 75% 68% 64% 61% 56% 55% 11% 13% 18% 25% 32% 36% 39% 44% 45% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1975 1985 1995 2005 2015 2025 2035 2045 2055

Sha re 65+ Sha re 20-64

Source: data before 2010 from Japan Statistical Yearbook; Figures for 2011-2060 from NIPSSR 2012 Projection

TURNOUT RATES BY AGE IN 2012 LOWER HOUSE ELECTION

35.3% 40.3% 47.1% 52.6% 55.2% 62.5% 66.7% 69.3% 73.2% 77.2% 76.5% 71.0% 48.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+

Source: Soumushou Senkyobu, Dai-46-kai Shuugiin Giin Sousenkyo ni okeru Nenrei-betsu Chousa Gaiyou, February 2013.

ELIGIBLE AND ACTUAL VOTERS IN 2012 LOWER HOUSE ELECTION

Source: Soumushou Senkyobu, Dai-46-kai Shuugiin Giin Sousenkyo ni okeru Nenrei-betsu Chousa Gaiyou, February 2013.

70.3% 66.8% 29.7% 33.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

E lig ib le Vo te rs Ac tua l Vo te rs 65+ 20-64

PROJECTED SHARE OF ACTUAL VOTERS

63.0% 60.1% 57.0% 51.9% 50.7% 37.0% 39.9% 43.0% 48.1% 49.3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

(2015) (2025) (2035) (2045) (2055) 65+ 20-64

Applies 2012 age-specific turnout rates to population projected in 2012 NIPPSR population projections.

POSSIBLE POLICY IMPLICATIONS

• Older voters may block efforts (via consumption

tax increases) to shift tax burden onto the elderly and off of working-age adults and corporations.

• They may block efforts to cut pension & medical

benefits for the elderly.

• On the other hand, they have an incentive in

keeping the government solvent enough to pay their retirement benefits.

CONSUMPTION TAX

• No da a nd DPJ pa id a hug e pric e in 2012 fo r ra ising

the ta x.

• Ab e ha s do ne the po litic a lly po pula r thing a nd

po stpo ne d the se c o nd-sta g e o f the ta x inc re a se until 2017 a he a d o f this e le c tio n.

• Will the pa rty in po we r b e a b le to withsta nd the

pre ssure to po stpo ne a g a in?

WORKING AGE JAPANESE ALREADY BEARING A HEAVY LOAD UNDER PENSION REFORM OF 2004

13.58 16.77 18.30 2 4 6 8 10 12 14 16 18 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Japanese Employee Pension Contribution Rates (% of salary)

13260 16900 2000 4000 6000 8000 10000 12000 14000 16000 18000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Japanese National Pension Contribution Rates (yen/month)

If Japan Can’t Raise Taxes or cut Retiree benefits, its debt problem will get even worse…

Public Debt as % of GDP OECD Economic Outlook No. 92 50 100 150 200 250 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Japan United States

AGING VOTERS AND L.D.P. DOMINANCE

• Very difficult to speculate about this given how the party

system remains in flux.

• Today, the LDP benefits from disproportionate support

from elderly voters while younger voters have tended to be more supportive of opposition parties.

• Possible the LDP will lose support as its most supportive

cohorts pass away. But if young cohorts become more conservative as they age, they may sustain the party’s support well into the future….

ELECTION ON DECEMBER 14