NY Fed – Thomas Klitgaard and Preston Mui: “Japan’s population is shrinking and getting older, with the population falling at a 0.2 percent rate this year and the working-age population (ages 16 to 64) falling at a much faster rate of almost 1.5 percent. In contrast, the U.S. population is rising at a 0.7 percent annual rate and the working-age population is rising at a 0.2 percent rate. So far, supporting the growing share of Japan’s population that is 65 and over has been the substantial increase in the share of working-age women entering the labor force. In contrast, U.S. labor force participation rates have been falling for both men and women. Japan’s labor market adjustments help explain the steady, albeit, modest growth in output per person despite the surge in the 65 and over cohort. Indeed, Japan has been able to match U.S. per capita growth since 2000. The United States and Japan are experiencing very different population trends. Organisation for Economic Co-operation and Development (OECD) data show that the U.S. population has increased 12 percent since 2000, while Japan’s population has fallen back to near where it was that year. The more striking development is that the working-age population in Japan is down 9 percent since 2000 while it is up 12 percent in the United States. As a consequence, the population share of those 65 and over has increased from 17 percent to 23 percent in Japan over this period while the U.S. share has increased from 12 percent to 14 percent.”