Why do Japanese workers remain in the labor force so long?

As part of the search for answers to questions about what could be done to increase labour force participation rates among older American workers, this paper looks at recent developments in Japan, one of the few industrial nations that has substantially higher labour force participation rates among older workers than the United States.

The authors site the following reasons for the continued presence of older workers in the labour market:

• the vast majority of older workers in Japan remain in the labour force primarily to maintain their standard of living. Many retire from their life-long careers with modest pensions but take up new employment elsewhere in order to maintain their standard of living as close as possible to the level achieved by their late 50s
• in Japan a substantially larger share of older workers are self-employed than in the United States, and many self-employed Japanese workers elect to remain working after age 60. Also, a greater fraction of older Japanese workers are part-time workers than in the U.S.
• Japanese culture places a high value on being a productive member of society, and therefore a much higher value on work than on leisure, even among older workers
• the Japanese government takes an active role in facilitating the labour force
  participation of older workers, including providing support for employers in addition to the support for employees. The main measures introduced for supporting employers include providing consultants and financial subsidies and incentives to promote employment among older workers
• among the industrial nations, according to the World Health Organization, Japan
  has a longer healthy life expectancy than any other industrial country and the United States has the shortest healthy life expectancy. Japanese are generally healthier and thus physically more able to work. Also, the Japanese Government has introduced a number of public policies focused on health promotion for the older population
• Gender dynamics between Japanese older male workers and their spouses may also be influencing their work choices - with some men unable to adopt a post-retirement lifestyle and new leisure interests.

The authors present three suggestions for the United States based on the evidence from Japan:

• if the goal is to increase labour force participation among older workers in the U.S., increase the financial incentive for older workers to remain working
• it should be possible to increase labour force participation rates among
  older workers in the U.S. by increasing the extent of government intervention in the
  economy and fostering mechanisms to link older workers to prospective employers
• if the U.S. government were to increase various forms of support for
  older workers seeking to become self-employed, this might increase labour force
  participation for those age 60 and over.