Population Aging and Business Successions: A macroeconomic perspective

This paper studies how population aging shapes firm dynamics and macroeconomic outcomes through business succession. Using large-scale Japanese firm-level panel data, we document systematic age transition patterns in successions, an inverted U-shape in performance with respect to managerial age, and the causal effects of succession on firm outcomes. Building on these facts, we develop a general equilibrium model with heterogeneous firms and life-cycle managerial ability. The model shows that declining population growth reduces succession but raises average managerial ability and strengthens firm selection. Quantitative analysis suggests that despite lower aggregate output, per capita output increases under demographic decline.