Human Capital & Ageing

as part of the "Next World Program"

Harvard School of Public Health

Boston, Massachusetts

April 13-14, 2015

Organized by:

David E. Bloom, Harvard School of Public Health, USA; David Canning, Harvard School of Public Health, USA; Karen Eggleston, Stanford University, USA; Wang Feng, Fudan University, China; Hans Groth, World Demographic & Ageing Forum, Switzerland; Alfonso Sousa-Poza, University of Hohenheim, Germany; Thomas Zeltner, Special Envoy, World Health Organization, Switzerland.

Topic

One of the challenges faced by ageing societies is maintaining a workforce large enough to supply the goods and services needed by a country's entire population. In the coming decades, industrialized countries will experience a steep increase in the share of elderly persons in the population and a fall in the share of the working-age population. In some countries, the number of people aged 60-64 (many of whom are about to retire) already exceeds the number of people aged 15-19 (the cohort soon entering the labour market). There will, however, be mitigating factors that will tend to decrease the effects of declines in the working-age share of the population: (a) the burden of caring for a high number of elderly people will be offset by there being fewer children to support, and (b) the proportion of adult women who work will rise when there are fewer children to take care of. Still, if there is no change in work and retirement patterns, the ratio of older inactive persons per worker will almost double from around 38 percent in the OECD area in 2000 to just over 70 percent in 2050 (OECD, "Live Longer, Work Longer", 2006). In Europe, this ratio could rise to almost one older inactive person for every worker over the same period.

Ageing on the anticipated scale will place substantial pressure on public finances and economic growth. According to the OECD, on the basis of unchanged participation patterns and productivity growth, the growth of GDP per capita in the OECD area would decline to around 1.7 percent per year over the next three decades, as compared with about 2.4 percent per year between 1970 and 2000. These negative consequences of ageing could be possibly offset by postponement of retirement, greater immigration, faster productivity growth, or higher fertility (although the positive economic effects of higher fertility would only come several decades after an uptick in fertility rates). While these developments would all help offset the negative effects, they need to go hand-in-hand with attempts to mobilize available labour in order to sustain economic growth. One of the most significant sources of additional labour supply is older people who are currently inactive. Indeed, as labour markets tighten, companies will soon have little choice but to be more welcoming of older employees. Prompt action to harness – and enhance – the contributions of older workers could become a key competitive advantage.

The objective of this workshop would be to discuss one important topic related to an ageing workforce, namely human capital. How does a worker’s human capital change over the life course and what role does the health and skill status of workers play? The answer to these questions is of great importance, not only for adequate human resource policies, but also for macroeconomic policies, especially those associated with retirement and economic growth. Despite the importance of this issue, this question is not easily answered.

The workshop will bring together researchers to present recent research on ageing and human capital. Research questions and topics that could be dealt with include:

• Human capital, economic growth, and the demographic dividend.
• Firm-level experience in promoting human capital among older workers.
• Evaluation of policies aimed at enhancing the quantity, quality, and value of older workers’ human capital.
• The relationship between human capital and productivity.
• Training and wages of older workers.
• Technological change, knowledge replenishment, and productivity. 

Submission for the Workshop

Interested authors are invited to submit a 1-page abstract by the 30th of September 2014 to David E. Bloom (dbloom@hsph.harvard.edu) and Alfonso Sousa-Poza (Alfonso.sousa-poza@uni-hohenheim.de). The authors of accepted abstracts will be notified by the end of October and completed draft papers will then be expected by the 28th of February 2015.

Economy class travel and accommodation costs for one author of each accepted paper will be covered by the organisers.

A selection of the papers presented at the workshop will (assuming successful completion of the review process) be published in a special issue of the Journal of the Economics of Ageing.

Submission for the Special Issue

Interested authors (also those not attending the workshop) are invited to submit papers for the special issue in the Journal of the Economics of Ageing by the 31st of May 2015. Submissions should be made online at http://ees.elsevier.com/jeoa. Please select article type “SI Human Capital.”

About the Next World Program

The Next World Program is a joint initiative of Harvard University’s Program on the Global Demography of Aging, the WDA Forum, Stanford University’s Asia Health Policy Program, and Fudan University’s Comparative Aging Societies. These institutions will organize an annual workshop and a special issue in the Journal of the Economics of Ageing on an important economic theme related to ageing societies.

The Japanese Cabinet, headed by Prime Minister Shinzo Abe, announced a reinterpretation of the country’s Constitution on July 1st, marking a significant shift in its pacifist security policy that it has held for nearly seventy years.

A controversial aspect of the Constitution’s reinterpretation concerns Article 9, a defense clause that outlaws a traditional military and use of force to settle disputes. The recent announcement, however, suggests lifting Japan’s ban on collective self-defense, extending the country’s ability to apply use of force not only to respond to an armed attack against Japan but also when an armed attack occurs against its allies.

Ryo Sahashi, a visiting associate professor at Shorenstein APARC, writes on the %link1% that it is necessary for Japan to enhance its deterrence through greater diplomacy, not just an enlargement of its military. He says Japan, like other nations, is entitled to secure its territory and pursue its own alliance partners. However, the lack of public support toward the reinterpretation is concerning, and will present challenges as the administration seeks to implement its new policies.

Sahashi also spoke with %link2% about Japan’s changing security paradigm in the context of Mr. Abe’s state visit to Canberra, Australia. He points out that it will take a year for the administration to change the laws associated with the Constitution’s reinterpretation, saying this time gap will allow the Government to shore up national support. His interview is available below, it starts around minute 1:12.

Following the Cabinet’s announcement, a poll conducted by the Yomiuri Shimbun reported a 48 percent approval rating of the Abe administration, down nine percentage points when compared to last month. Daniel Sneider, the associate director for research at Shorenstein APARC, says in the %link3% that the poll reflects the public’s lack of support for the policy changes.

Stanford economist Takeo Hoshi’s new co-authored working paper, “Implementing Structural Reforms in Abenomics: How to Reduce the Cost of Doing Business in Japan,” is cited in the Wall Street Journal and the Washington Post.

Japanese Prime Minister Shinzo Abe formed a panel to rewrite national textbooks that reference the country's wartime past. Daniel Sneider, associate director for research at Shorenstein APARC, says those actions are a “backdoor way of limiting references to Japanese aggression” in an Economist article analyzing the history debates.

Update: A full report summarizing the discussion of the 12th Korea-U.S. West Coast Strategic Forum is available below.

Northeast Asia has been rife with animosity over the past year. Among the outstanding concerns are China’s naval movements in the South China Sea and the threat of a fourth nuclear missile test by North Korea. While no major incidents have occurred in recent months, the uncertainty weighs heavily on policymakers and observers. What if an accidental clash happens in the sea or air?

Senior security scholars and practitioners from South Korea and the United States recently gathered for the Korea–U.S. West Coast Strategic Forum, a Track II workshop to exchange views on these major issues impacting the Northeast Asia region.

The Strategic Forum, established in 2006, is held semiannually and alternates between Seoul and Stanford, hosted by the Korean Studies Program at the Shorenstein Asia-Pacific Research Center. The Korean counterpart organization is the Institute of Foreign Affairs and National Security, the foreign ministry’s think tank within the Korea National Diplomatic Academy. 

Twenty-four participants gathered on June 20 at the Bechtel Conference Center, and offered a diversity of opinions on Korean peninsula issues and the potential impact they could have on the countries’ allies. The participants collectively expressed a desire for regional stability, increased dialogue, and commitment to maintaining the U.S.–ROK alliance and cooperation on other trust-building activities.

The conference operates under the Chatham House Rule of individual confidentiality to allow for candid conversation. A few main points from the sessions are disclosed below:

Session I: Northeast Asia Regional Dynamics

Many participants shared the concern that trilateral relations between China–South Korea–Japan are at one of the worst points in recent history.

China’s current attitude toward its neighbors and the United States was discussed at length. Many participants discussed the strategic trajectory of China and how the country’s domestic situation may challenge its ability to effectively move forward, contrary to popular perceptions that simply straight-line its current growth rate into the indefinite future. 

Korean participants expressed concern toward Japan’s position, particularly following Prime Minister Shinzo Abe’s visit to Yasukuni Shrine and the stance he has taken on other wartime issues like “comfort women.” They said they hoped the United States would do more to help Korea–Japan relations, as participants recognized the desirability of increased trilateral U.S.–Japan–Korea security and diplomatic cooperation.

Session II: U.S.­–Korea Free Trade Agreement (KORUS FTA)

Participants shared the view that the U.S.­–Korea Free Trade Agreement (KORUS FTA) is serving to broaden and deepen the U.S.­–ROK relationship.

The KORUS FTA is only in its second year of implementation, so additional time is needed to make a comprehensive evaluation, but it appears that it will significantly increase bilateral trade as time passes.

Session III: U.S.–ROK Alliance

The U.S.­–ROK relationship, on the whole, is in very good shape. South Korea and the United States have similar policies in most strategic areas.

The two countries cooperate on many diplomatic and security initiatives, such as the U.S. 28,500-strong troop presence in South Korea and many United Nations peacekeeping missions abroad. 

Session IV: North Korea

Participants agreed that North Korea continues to engage in provocative behavior. This remains the chief concern of the U.S.–ROK alliance, as well a priority of the international community in total.

The policies of the United States and South Korea toward North Korea are well-coordinated and principled, but a number of Korean and American participants expressed concern that more creative thinking was needed, as the challenges North Korea poses are increasing. 

Reports from past forums are available on the Shorenstein APARC website.

The Korean Studies Program at Shorenstein APARC welcomes Mike Cowin, the deputy head of mission at the British Embassy in Pyongyang as a Pantech Fellow, and Oh Yeon-Cheon, the president of Seoul National University as a Koret Fellow.

Announcements about both appointments are posted below.

Phillip Lipscy, the Thomas Rohlen Center Fellow at FSI and assistant professor in the Department of Political Science, talks about his time at Stanford as a student and teacher. In conversation with Shorenstein APARC, Lipscy highlights current projects and motivations to research in the fields of East Asian political economy and international relations.

You studied at Stanford as a student and returned as an assistant professor and center fellow. What led you back to campus? What has changed, remained the same?

Stanford is an incredible place to pursue the kind of research I am interested in, which focuses on international relations and the political economy of East Asia. Stanford’s political science department is among the top in the world, and Shorenstein APARC is among the most highly regarded research centers focusing on the Asia-Pacific region. All of these things have remained the same since I was a student. Probably the biggest change since I was an undergraduate is the broadening and deepening of expertise at Shorenstein APARC, particularly in the areas of Korean studies and health policy. 

What motivated you to pursue research on East Asia?

When I was an undergraduate at Stanford, Professor Daniel Okimoto was a great mentor and inspiration (he was the co-founder of Shorenstein APARC and now Professor Emeritus of Political Science). I think his influence was the most important factor. I was also born to a multicultural family and spent about equal parts of my childhood in Japan and the United States, so I have always been interested in the differences among societies and how they interact. 

One focus of your research areas is on energy policy in Japan and other countries. What lessons can you draw from your research for policymakers?

I show in my recent piece in the Annual Review of Political Science that political scientists largely neglected energy issues after the oil shocks of the 1970s. There needs to be more research on the politics of energy. One of the findings of my recent work is that countries generally do better in achieving energy efficiency improvements in political systems where consumers have less influence: the governments of these countries can get away with imposing higher prices on energy consumption, which leads to conservation and efficiency. One illustration is Japan, which achieved very high levels of energy efficiency after the oil shocks, but which has struggled in recent years as bureaucratic scandals and electoral reform have tilted the scales in favor of consumer interests. There is an obvious tradeoff though, because political insulation also means less accountability. A good illustration of the downside of insulation is the collusion between policymakers and utility companies in Japan, which was made painfully obvious after the Fukushima disaster. Our study of nuclear power plants shows that large, influential utilities in Japan, which tend to be politically powerful, were also the least prepared against a potential tsunami.

Another of your research streams is on international organizations such as the United Nations, International Monetary Fund and World Bank. Do you see East Asia’s role expanding in these organizations over time?

I am working on a book that examines how international organizations respond to shifts in international power, such as the one we are observing today with the rise of Asia. In a forthcoming article in the American Journal of Political Science, I show that there are important differences in how institutions adapt to these sorts of global changes, and I offer an explanation for how these differences arise. My research shows that East Asia is consistently underrepresented in many of the major international organizations that have become central to the functioning of the international system since the end of World War II. The world is changing rapidly, but the international architecture is struggling to keep up. East Asia’s position in these institutions will surely grow over time, but there is also the danger that dissatisfied countries will disengage and seek alternatives, fracturing the postwar order developed by the United States. This is one of the topics I explore in my forthcoming book.

Can you tell us about your involvement in the upcoming Summer Juku on Japanese Political Economy?

I am co-organizing the Summer Juku along with Takeo Hoshi and Kenji Kushida. The Juku was Takeo’s idea. We hope to develop it into the premier venue for exciting new research on Japanese political economy. Judging from the quality of papers submitted for the first two meetings, we are well on our way. Along with a new discussion platform we are planning, which focuses on Japanese political economy, and the Japan lunch series, which just completed its second year, the Juku really showcases the breadth and depth of Shorenstein APARC’s engagement with the study of contemporary Japan. 

Tell us something we don’t know about you.

I once learned Kyogen, traditional Japanese comic theater, from a living national treasure.

The Faculty Spotlight Q&A series highlights a different faculty member at Shorenstein APARC each month giving a personal look at his or her scholarly approaches and outlook on related topics and upcoming activities.

Oh Yeon-Cheon, the president of Seoul National University (SNU), has been named the 2014–15 Koret Fellow. He will join the Korean Studies Program at the Walter H. Shorenstein Asia-Pacific Research Center this fall after completing his four-year term as SNU’s president. 

Oh Yeon-Cheon

“Yeon-Cheon has demonstrated forward-thinking, innovative leadership as SNU’s president. We’re delighted to welcome him back to Shorenstein APARC and look forward to collaborative dialogue on national values and the increasingly important role that educators play in their adoption by young people,” says Gi-Wook Shin, director of Shorenstein APARC.

The Koret Fellowship brings leading professionals from Asia and the United States to Stanford University to study U.S.–Korea relations with the broad aim of fostering greater understanding and closer ties between the two countries.

Oh will analyze the significant change in the history of East Asia since the late 19th century, and in the process, identify forces endemic to East Asian politics, economy and culture as well as their limitations, thereby attempting to create a model for “Asian Values.”

He aims to create a new paradigm for higher education that will actively foster leaders who can contribute to the peace and prosperity of humanity, and also propose new alternative policies. Oh gave a lecture on this topic at Shorenstein APARC earlier this year. 

Oh has an extensive career as a university administrator, professor and in leadership positions in South Korea’s civil service. He is the 25th president of SNU (2010­–2014) and chairman of the Board of Trustees. Before then, he taught at SNU’s Graduate School of Public Administration from 1983 to 2010, and also served as the dean of that school from 2000 to 2004. His main areas of research include applied public economy and financial management.

Outside academia, Oh served as the chairman of the Committee of Industry Development Deliberation, Ministry of Knowledge Economics, from 2007 to 2009; board member of ITEP, Ministry of Commerce, from 2005 to 2009; and chief of ICT, Policy Review Committee, Ministry of Information and Communication, from 2003 to 2007.

He received his bachelor’s degree in political science from SNU, and his master’s degree and doctorate in public administration from New York University. 

The Koret Fellowship, established in 2008, is made possible through generous support from the Koret Foundation.

Mike Cowin, the deputy head of mission at the British Embassy in Pyongyang, Democratic People’s Republic of Korea (DPRK), will join the Korean Studies Program at the Walter H. Shorenstein Asia-Pacific Research Center as the 2014–15 Pantech Fellow.

Mike Cowin

“Mike brings immense insight not only on the DPRK through his experience as the deputy head of mission, but also on Northeast Asia having spent twenty years covering Korean issues for the British Government,” says Gi-Wook Shin, director of Shorenstein APARC. “We’re delighted to welcome him and know his presence will cultivate new perspectives on the interplay between regional and global forces in and around the DPRK.”

The Pantech Fellowship provides an opportunity for a leading expert to reside at Shorenstein APARC and participate in workshops and other collaborative activities intended to enhance the fellow’s ability to engage and resolve issues related to Korea.

During his time at the Center, Cowin will focus his research on economic/social development that he has seen taking place in the DPRK while serving there.

Cowin, a specialist on Korea and Japan, has been a member of the Research Cadre of the Foreign & Commonwealth Office (FCO) of the United Kingdom since 1988. He has also served in the British embassies in Tokyo from 1992 to 1997, in Seoul from 2003 to 2007, and presently in Pyongyang, as deputy head of mission, since March 2012.

He has spent most of his career in London working on policy related research, providing advice to relevant policy desks and acting as the interface between the FCO and academic and research institutions.

The Pantech Fellowship, established in 2004, is made possible through generous support from Pantech Co., Ltd., and Curitel Communications, Inc. (collectively referred to as “The Pantech Group”).

Over 215 million Muslims live in the Asia-Pacific region, but despite their number and proximity to record growth and opportunity in greater Asia, their experience has been one of persistent, widespread socioeconomic and political decline. 

A new book, Modes of Engagement: Muslim Minorities in Asia, published by the Walter H. Shorenstein Asia-Pacific Research Center (APARC) and distributed through The Brookings Institution, offers leading research on this topic and places it in a geographic perspective. Edited by Rafiq Dossani, a senior researcher at the RAND Corporation and Professor at the Pardee RAND Graduate School of Public Policy, the book paves new paths to understanding the paradox of Muslim minorities in Asia. 

Dossani was at Stanford University for nearly fifteen years as a senior research scholar at Shorenstein APARC and as the executive director of the South Asia Initiative, studying the plight of Muslims and higher education in India, among other topics. The book is a result of a seminar series with the book’s contributors.

“Since the 1970s, especially in China, Asia’s growth rate has been unprecedented within Asia’s own history,” Dossani says. Mainstream Asia has seen a rise in job opportunities and income levels, and as a result, an individual ability to accumulate wealth and commit resources to long-term investments, such as education and innovation activities.

However, not all people have found benefit from this modern, economic transformation. Most notably, Muslims have seen a severe decline in their social and political space, as well as a narrowing of their identity.

Analysts find this surprising because history reflects a narrative that says Muslims should have profited along with the rest. “It wasn’t expected that Muslims would lose out in the countries in which they were minorities,” he says.

The volume investigates this puzzle through three case studies: the Philippines, India, and China. In each country, Muslims are at least 5 percent of the population, the largest number being in India. Dossani weaves together common threads that define the Muslim minority experience. Similarities include the impact of state-led ethnic nationalism and forced assimilation. He also writes that Muslims have been unable to use protest to secure any significant, long-term gains.

Given this dire reality, what prospects lie ahead for Muslim minorities? In conversation, Dossani suggests a few policy priorities gathered from the case studies featured in the volume.

Democracy is not the answer

Democracy, a form of governance that is often championed for its equal civic participation, has not facilitated a level playing field for Muslims when theory dictates it should.

“Democracy is not the answer to handling these problems,” says Dossani, emphasizing, “it is a most inadequate answer.”

This situation is evident in the case of India where Muslims have probably done the worst, compared to the Philippines, which also shares a legacy of colonial rule and transition to democracy.

Muslims in India, who have attempted to elevate their interests on the national stage, are stopped by coalition politics. Larger interests of the group can subsume their own, encroached upon further by caste issues, language barriers and other dividing factors. China’s Hui have found a significantly better experience than the Uyghurs, who were separated from mainland China early on and excluded from opportunities afforded there (the Uyghurs reside in a northwest region, Xinjiang). In the case of India, Muslims make up only ten to fifteen percent of the population in almost every state, thus their voice fails to find leverage in the political sphere, and effectively lose out.

Furthermore, democracy is not a panacea when states are vulnerable.

“When you have very weak and fragile states, where intuitions are subject to capture easily, democracy doesn’t work,” Dossani explains. Muslim minorities are unable to gain clout because the majorities, and elites attempting to fill a power vacuum, crowd them out.

Thus, collective interest and concerted efforts on the part of governmental and non-governmental organizations – a larger nexus of individuals working toward common goals – are essential to create momentum and staying power behind Muslim issues.

“You need civil society where it explicitly deals with the issues of minority populations and tries to convince the national government and state governments that improving the lots of minorities should be a national project with commitment to their improvement,” he says.

Development as a way forward

Some national projects were developed to openly address Muslim issues, but this led other internal ethnic and religious groups to ask, “Why are you appeasing the Muslims?”

Especially since 9/11, governments have increasingly come under pressure. Stigmas that narrow Muslim identity into “extremists” and “terrorists” are more progressively shared, making it near impossible for governments to explicitly offer a helping hand to Muslims without domestic backlash. 

But even with the odds against them, Muslim minorities still have a way forward.

In the three countries studied, Muslims have found traces of success, and in other Asian nations such as Sri Lanka and Nepal, there has been considerable accommodation of Muslims. Across all circumstances, “Muslims have done best in countries where the state has focused on education for all,” Dossani says.

Instead of providing ethnic-based aid, governments should focus on resource availability as a main qualifier for assistance. State-sponsored education and health care initiatives that capture the poorest populations help Muslims who inherently fall into this category. 

“Any wise government would say ‘look we want to connect education to development and focus on the poorest, no matter who they are.’ If they do that, Muslims will automatically get their fair share,” he says. The Philippines has already recognized this reality, and begun to implement development projects that naturally include Muslims.

Regime change can also motivate Muslim accommodation, either directly or indirectly, as is likely in the case of India.

Newly appointed Prime Minister Narendra Modi, although said to have an anti-Islamic stance in the past with the Bharatiya Janata Party, may in fact create policies that favor Muslims because it fits in with a grander vision of national growth. 

Referring to Prime Minister Modi, Dossani says, “It’s not clear that he cares about Muslims, but in some ways, he cares about development.

“At some point, any development-conscious person will realize that no country can progress if 15 percent of the country hangs behind.”

Diaspora matters

The swell of migration in the globalized era has made the formation of diaspora communities, dispersed populations outside of country of origin, a common phenomenon. Muslim minorities are a large part of this movement, seeking opportunity and using their ethnic or religious connections to establish a new life elsewhere.

Muslims of Asian origin are located beyond Asia – in the Middle East, North Africa and Southern Europe, among other areas. But despite being removed from their native soil, an allegiance and interest in the homeland typically remains.

“Diaspora exists in a very big way,” Dossani explains. Their influence should not be underestimated, both financially and politically. The Muslim diaspora provides an important channel of support that helps struggling Muslim populations.

Remittances from relatives overseas can bring in substantial transfers of money and support to populations that may not otherwise have enough resources, or be supported by the government. For several years now, one of the single largest inflows of money into the Philippines has been from these outside sources. India’s Muslim diaspora has a strong diasporan foundation with codified institutions set-up to organize relations. China’s experience is less documented, Dossani says, although he conjectures that some diasporan support exists, whether formally or informally.

Diaspora organizations, often led and supported by expatriates, appear to be growing worldwide, and can play a crucial role in the formation of Muslims’ global identity and network of support. Neighboring countries with Muslim majorities, such as Malaysia and Indonesia, have also offered themselves as diplomatic partners in resolving conflicts over Muslims’ conditions, given their own long histories of addressing them internally.