Thursday, September 9, 2010

What Happened to Japan? Mostly Labor Supply

Elderly people are less able or willing to work than middle aged persons. When a large chunk of Japan's population changed from middle aged to elderly, Japan had less labor supply and ultimately less output. Professor Krugman explains how labor supply was the major factor in Japan's stagnation, although admittedly not the only one.

Interestingly, when it comes to Japan, Professor Krugman agrees with me that labor supply matters in the usual way, even when the economy is in a liquidity trap. But he says the opposite for the United States.


madill80 said...

I also see parallels in B. Anderson's "Economic and the Public Welfare" Chapter 31 and M. Rothard's "America's Great Depression" chapters 9 and 10. But as a laymen, I could be wrong.

muzammal khan said...

or solutions that the jobless buy, compared with the work concentration of the products or solutions that those who pay for lack of career do not buy. bubblegum casting

Yasir Khalid said...

There is a big problem with this example: Oil companies do not hire people to produce oil today. They hire them to produce oil some years in the future. he has a good point