This slide shows the effect of these different policies in
Japan using a model of the Japanese population which I developed
to model the population out to 2035.
This chart measures on the y-axis.
The old age dependency ratio, that is the number of people aged
over the retirement age divided by the population working.
And the x-axis shows the year.
The yellow line in this chart is
the old age dependency ratio in Japan with no change of policy at all.
The orange line, the jagged line which drops rapidly,
is the effect of chaining of the retirement age from 2010, with
a single year increase in the retirement age every five years up until 70.
The blue line, which is mostly obscured by the other line but
begins to protrude from it and below it, from about 2020,
is the effect of increasing birth rates, to by about 50% from 2015.
So, the current birth rate in Japan is about 1.2 million,
or 1 million babies per year, and I've modeled year increasing that to 2 million.
And finally, the grayish line,
which protrudes from the yellow line earlier on, is the effect of
introducing an extra 500,000 migrants a year into the Japanese population.
You can see, that both the migrant and the birth model, even though they involve
quite large changes, have very little effect on the dependency ratio.
And the birth model takes 15 years to take effect.
The only truly effective short-term intervention
is raising the retirement age.
And this shows that even quite stringent policies,
based on nativism or immigration, may not have a very large effect.
And this shows the difficulty of changing the aging process rapidly.
Aging is defined primarily by what’s called demographic momentum.
Which is the effect of past population build up.
And as we saw in a previous lesson, there is a large bulge of people,
just under the retirement age in Japan.
And they will soon enter this dependency ratio on the top line.
Which is why, it's very hard to change The dependency ratio rapidly in Japan.