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The labor force in Japan is projected to fall from 64 million in 2014 to 20 million in 2100, signaling unprecedented tax/transfer adjustments to achieve fiscal sustainability. In this paper, we develop a quantitative overlapping generations model to measure the impact of guest worker programs in Japan. Against a baseline general equilibrium transition in which the consumption tax adjusts to achieve fiscal sustainability, we compute alternative transitions with guest worker programs. Depending on the size and skill distribution of guest workers, these programs may mitigate Japan's fiscal imbalance problem with a relatively manageable increase in the consumption tax. ( JEL E2, E6, H5, J11, J15) [ABSTRACT FROM AUTHOR]

The author discusses the aspects of estimating Non-Keynesian effects for Japan. He mentions about the empirical work performed on economics for the Japan. Also investigated is the effect of increasing the consumption tax on the economy of Japan which is neutral since both in terms of Keynesian and non-Keynesian effects.