WOMENOMICS

Older women are saving Japan’s economy

In 2013, Japanese Prime Minister Shinzo Abe addressed the General Assembly of the United Nations on Japan’s plan to “refortify” its economy.

“There is a theory called ‘Womenomics,’ which asserts that the more the advance of women in society is promoted, the higher the growth rate becomes,” said Abe. “Creating an environment in which women find it comfortable to work and enhancing opportunities for women to work and to be active in society is no longer a matter of choice for Japan. It is instead a matter of the greatest urgency.”

They were not empty words. Since Abe’s speech, the Japanese government has promoted women entering the workplace in a variety of ways. The economist Noah Smith, writing for Bloomberg, points out that since Abe entered office the government has expanded government-sponsored day care, awarded government contracts to companies that hire more women, and capped the amount of overtime employees can work in order to create more work-life balance for working mothers. It’s also taking steps to promote flexible work arrangements. With the ratio of vacancies at a 43-year high (paywall), and a working-age population that is projected to decline by nearly 4% by 2022, these women are desperately needed to keep the economy afloat.

In terms of bringing women into the workforce, Womenomics appears to have been a resounding success. In the nearly four-and-a-half years that Abe has been in office, the percent of women ages 15-64 in the workforce has increased by more than one percentage point per year. In the 10 years before Abe, the average increase was less than half a percent. As a result of this rapid growth, Japan’s female labor market participation has surpassed that of the US.

Though all ages of women are working more in Japan, one group has responded to Womenomics more than any other. Evan Soltas, a former journalist now studying to be an economist at Oxford University, found that the rate of 55-64 year old women in the labor market has skyrocketed since Abe has been in office. In January 2013, just 55% of older Japanese women were working or looking for a job. In May of 2017 that number had reached 63.6%.

Through high government spending and monetary stimulus, the Japanese government has been running the economy hot during Abe’s administration. “When you increase demand for Japanese goods and services, the labor to meet that demand has to come from somewhere,” Soltas told Quartz. “Men and younger women already have high participation rates, so, simply from a mathematical perspective, there are more older women to bring into the workforce.”

In January 2013, only 59% of 55-64 year old women were in the labor market compared to 74% for 25-54 year old women and nearly 85% for 15-64 year old men. The combination of government policies favoring women and the low initial starting point for older women was the perfect recipe for this rise.

The following chart demonstrates just how much faster the labor market growth has been for older women than younger ones.

Due to a declining birth rate, aging population, and restrictive immigration policies, the number of working age Japanese people is falling. Given the circumstances, these additional older female workers have been crucial to keeping the Japanese economy plugging along—Japan’s per capita GDP grew by 1.1% in 2016. Abe’s Womenomics seems to be working, but perhaps it should be renamed Older Womenomics.

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