Chart 3 Unemployment Rate and Suicides sons 0.000 35,000 30.000 25.000 65432 15000 10000 5.000 198082848688909294969800020406081012141618 Number of suicides -Unemployment rate(right scale) Sources: National Police Agency, " Suicide Statistics", Ministry of Internal Affairs and Communications, "Labour Force Survey Slight Increase in the birth rate I think that a small improvement in the birth rate also has been achieved. Chart 4 shows the unemployment rate, the marriage rate, and the birth rate for the population of 20-to 39-year-olds. It is a well-known fact that the marriage rate and the birth rate are correlated as is more or less evident from the chart
5 Slight Increase in the Birth Rate I think that a small improvement in the birth rate also has been achieved. Chart 4 shows the unemployment rate, the marriage rate, and the birth rate for the population of 20- to 39-year-olds. It is a well-known fact that the marriage rate and the birth rate are correlated, as is more or less evident from the chart. Chart 3 Unemployment Rate and Suicides 0 1 2 3 4 5 6 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1980 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 Number of suicides Unemployment rate (right scale) % Sources: National Police Agency, "Suicide Statistics"; Ministry of Internal Affairs and Communications, "Labour Force Survey." persons
Chart 4 Rates of Unemployment, Marriage, and Birth 100 thous. persons(live births persons(birth rate); cases(ma 6 3 Tmmnnnnnnnnnnnnnnnnnnnnnnnnnnn 2 a Number of live births Birth rate(per 1,000 population aged 20 to 39) Marriage rate(per 1,000 population aged 20 to 39) Unemployment rate(aged 20 to 39, right scale) Note: For 1975 onward, the birth rate is calculated as the number of live births to mothers aged 20 to 39 divided by the population aged 20 to 39. For 1974 and earlier, the birth rate is calculated as the total number of live births divided by the population aged 20 to 39. The marriage rate is calculated as the total number of marriages divided by the population nged 20 to 39 ources:Ministry of Internal Affairs and Communications, "Labour Force Survey", Ministry of Health, Labour and Welfare "Vital Statistics Let us take a closer look at this. The birth rate per 1,000 population aged 20 to 39(hereafter birth rate), which previously had been on a declining trend, has been rising since 2005 along with the decline in the unemployment rate The bar graph in the chart illustrates this trend in terms of live births per population (hereafter live births ) Note how, when comparing two age groups with the same birth rate, the number of live births increases for the age group with a greater number of constituents Given that second-generation baby boomers(children of baby boomers born between 1947 and 1949)reached their average marriage age sometime between 1995 and 2000 or, if we take the rise in the average marriage age into account, sometime between 2000 and 2005 the number of live births subsequently would have increased had there been a reversal in the
6 Let us take a closer look at this. The birth rate per 1,000 population aged 20 to 39 (hereafter birth rate), which previously had been on a declining trend, has been rising since 2005 along with the decline in the unemployment rate. The bar graph in the chart illustrates this trend in terms of live births per population (hereafter live births). Note how, when comparing two age groups with the same birth rate, the number of live births increases for the age group with a greater number of constituents. Given that second-generation baby boomers (children of baby boomers born between 1947 and 1949) reached their average marriage age sometime between 1995 and 2000 or, if we take the rise in the average marriage age into account, sometime between 2000 and 2005, the number of live births subsequently would have increased had there been a reversal in the 1 2 3 4 5 6 7 0 10 20 30 40 50 60 1968 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 16 Number of live births Birth rate (per 1,000 population aged 20 to 39) Marriage rate (per 1,000 population aged 20 to 39) Unemployment rate (aged 20 to 39, right scale) 100 thous. persons (live births); persons (birth rate); cases (marriage rate) % Note: For 1975 onward, the birth rate is calculated as the number of live births to mothers aged 20 to 39 divided by the population aged 20 to 39. For 1974 and earlier, the birth rate is calculated as the total number of live births divided by the population aged 20 to 39. The marriage rate is calculated as the total number of marriages divided by the population aged 20 to 39. Sources: Ministry of Internal Affairs and Communications, "Labour Force Survey"; Ministry of Health, Labour and Welfare, "Vital Statistics." Chart 4 Rates of Unemployment, Marriage, and Birth
birth rate around this time There turned out to be no such increase however. The reason is that, during the approximate period from 1995 to 2005 and in the few years after the outbreak of the global financial crisis in 2008, young people of this generation were not able to find stable employment due to the so-called employment ice age, which led them to think twice about marriage and having children. ,0 Put differently, had QQe been introduced at an earlier stage, second-generation baby boomers would not have had to cope with the repercussions of the employment ice age, likely resulting in an increase in th number of live births from around 1995 Improvement in Government Finances An improvement in employment means that incomes increase. Firms hire people because their profits are rising. When employment grows, both profits and wages increase. When there is an increase in profits and wages--that is, the income of the country as a whole the government's tax revenue also rises. Chart 5 shows the general government fiscal balance(relative to GDP)and government debt(also relative to GDP). While Japans fiscal situation is severe, its deficit in fiscal 2017 shrank to 2.7 percent of GDP. Compared with a deficit of 8.3 percent in fiscal 2012, this is an improvement of about 5.5 percentage point The reason is that the economy has been doing well and the governments tax revenue has been increasing. The increase in tax revenue due to the consumption tax hike from 5 to 8 percent is said to amount to about 8 trillion yen(1.5 percent of GDP). while the remaining improvement of 4.0 percentage points is partly attributable to the effects of a positive turnaround in overseas economies, it owes in large part to the improvement in the economy 5 For details on the employment ice age, see Genda Yuji et al, Shiishoku hyogaki sedai no keizai shakai e no eikyo to taisaku ni kansuru kenkyii iinkai hokokusho, Research Institute for Advancement of Living Standards, November 2016 6 In his recent book, former Bank of Japan Governor Shirakawa argues that the immediate respo of many major Japanese firms to the large demand shock brought about by the bursting of the bubble and the outbreak of the global financial crisis in 2008 was to reduce graduate recruitment and increase non-regular employment. During this so-called employment ice age, the young bore the brunt of the employment adjustment. University graduates entering the labor market during this time the so-called second-generation baby boomers- found it difficult to accumulate sufficient skill as young workers, leading to lower income levels, which in turn has had a lasting social impact including an increase in the rate of those who are unmarried and the consequent decrease in the number of births(available only in Japanese). Shirakawa Masaaki, Chio ginko (Tokyo: Toyo Keizai, 2018),p.112
7 birth rate around this time. There turned out to be no such increase, however. The reason is that, during the approximate period from 1995 to 2005 and in the few years after the outbreak of the global financial crisis in 2008, young people of this generation were not able to find stable employment due to the so-called employment ice age, which led them to think twice about marriage and having children. 5 , 6 Put differently, had QQE been introduced at an earlier stage, second-generation baby boomers would not have had to cope with the repercussions of the employment ice age, likely resulting in an increase in the number of live births from around 1995. Improvement in Government Finances An improvement in employment means that incomes increase. Firms hire people because their profits are rising. When employment grows, both profits and wages increase. When there is an increase in profits and wages -- that is, the income of the country as a whole -- the government's tax revenue also rises. Chart 5 shows the general government fiscal balance (relative to GDP) and government debt (also relative to GDP). While Japan's fiscal situation is severe, its deficit in fiscal 2017 shrank to 2.7 percent of GDP. Compared with a deficit of 8.3 percent in fiscal 2012, this is an improvement of about 5.5 percentage points. The reason is that the economy has been doing well and the government's tax revenue has been increasing. The increase in tax revenue due to the consumption tax hike from 5 to 8 percent is said to amount to about 8 trillion yen (1.5 percent of GDP). While the remaining improvement of 4.0 percentage points is partly attributable to the effects of a positive turnaround in overseas economies, it owes in large part to the improvement in the economy 5 For details on the employment ice age, see Genda Yuji et. al, Shūshoku hyōgaki sedai no keizai shakai e no eikyō to taisaku ni kansuru kenkyū iinkai hōkokusho, Research Institute for Advancement of Living Standards, November 2016. 6 In his recent book, former Bank of Japan Governor Shirakawa argues that the immediate response of many major Japanese firms to the large demand shock brought about by the bursting of the bubble and the outbreak of the global financial crisis in 2008 was to reduce graduate recruitment and increase non-regular employment. During this so-called employment ice age, the young bore the brunt of the employment adjustment. University graduates entering the labor market during this time -- the so-called second-generation baby boomers -- found it difficult to accumulate sufficient skills as young workers, leading to lower income levels, which in turn has had a lasting social impact including an increase in the rate of those who are unmarried and the consequent decrease in the number of births (available only in Japanese). Shirakawa Masaaki, Chūō Ginkō (Tokyo: Toyo Keizai, 2018), p. 112
as a result of QQE. Moreover, the ratio of government debt to gDp also has declined slightly from its peak of 239 percent in fiscal 2015 Chart 5 Fiscal Balance and Debt of general Government relative to Nominal GDP 200 100 0 FY19949698000204060810121416 Fiscal balance -Government debt outstanding(right scale) Source: Cabinet Office, "System of National Accounts. Decline in Personal Income Inequality Furthermore, income inequality has declined. Results of statistics show that income inequality in terms of equivalized disposable income has declined. 7, Meanwhile, Chart 6 7 See Statistics Bureau, Ministry of Internal Affairs and Communications, "Analytical [Results of] Income Distribution, "2014 National Survey of Family Income and Expenditure(available only in Japanese), October 2016 8 Equivalized disposable income is obtained by adjusting the quotient of household disposable income and the square root of the number of household members. In its international comparisons the Organisation for Economic Co-operation and Development(OECD) uses the Gini coefficient (see footnote 11)and the relative poverty rate for each country calculated on the basis of equivalized disposable
8 as a result of QQE. Moreover, the ratio of government debt to GDP also has declined slightly from its peak of 239 percent in fiscal 2015. Decline in Personal Income Inequality Furthermore, income inequality has declined. Results of statistics show that income inequality in terms of equivalized disposable income has declined.7,8 Meanwhile, Chart 6 7 See Statistics Bureau, Ministry of Internal Affairs and Communications, "Analytical [Results of] Income Distribution," 2014 National Survey of Family Income and Expenditure (available only in Japanese), October 2016. 8 Equivalized disposable income is obtained by adjusting the quotient of household disposable income and the square root of the number of household members. In its international comparisons, the Organisation for Economic Co-operation and Development (OECD) uses the Gini coefficient (see footnote 11) and the relative poverty rate for each country calculated on the basis of equivalized disposable income. 0 50 100 150 200 250 300 -12 -10 -8 -6 -4 -2 0 1994 96 98 00 02 04 06 08 10 12 14 16 Fiscal balance Government debt outstanding (right scale) % % FY Source: Cabinet Office, "System of National Accounts." Chart 5 Fiscal Balance and Debt of General Government Relative to Nominal GDP