IMF Working Papers

The Impact of Aging and AI on Japan's Labor Market: Challenges and Opportunities

By Kohei Asao, Haruki Seitani, Ara Stepanyan, TengTeng Xu

September 19, 2025

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

Kohei Asao, Haruki Seitani, Ara Stepanyan, and TengTeng Xu. "The Impact of Aging and AI on Japan's Labor Market: Challenges and Opportunities", IMF Working Papers 2025, 184 (2025), accessed September 20, 2025, https://doi.org/10.5089/9798229024747.001

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper explores the complex roles of demographic changes and technological innovation in shaping Japan's labor market. We use regression analysis to assess the impact of population aging on labor productivity and shortages. Our findings indicate that the aging workforce contributes to labor shortages and potentially weighs on labor productivity. We also investigate occupational level data to identify the complementarity and substitutability of AI in occupational tasks as well as skill transferability. Our research reveals that Japanese workers face lower exposure to AI compared to their counterparts in other advanced economies, thereby constraining AI's potential to mitigate labor shortages. Furthermore, the disparities in skill requirements across occupations with different AI exposures highlight the importance of facilitating labor mobility from displaced jobs to those in demand.

Subject: Aging, Employment, Labor, Labor force, Labor market policy, Labor markets, Labor mobility, Labor productivity, Labor shortages, Population and demographics, Production

Keywords: Aging, Artificial intelligence, Asia and Pacific, Eligibility, Employment, Germany, Global, Labor force, Labor force participation, Labor market, Labor market policy, Labor markets, Labor mobility, Labor productivity, Labor shortages, Population aging, Population and demographics, Skill transferability

Publication Details

You May Also Be Interested In...

Republic of Latvia: Selected Issues

September 19, 2025

Republic of Latvia: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Latvia

September 19, 2025

Tax Reform, Subsidies, and Labor Supply: Lessons from Türkiye

September 19, 2025

Kingdom of Lesotho: Selected Issues

September 18, 2025