Henry decomposes output per capita into output per hour worked times hours worked per working-age person times the proportion of working-aged people in the population. He calls these factors the three P's: productivity, participation, and population.
One of his main points is that Australia is suffering from weak participation relative to Japan, with the difference offset and disguised by demographic shifts.
Australia's total participation rate is higher than Japan's. But if you look at the age-specific participation rates you can see that in every age cohort, the Japanese participation rate is higher than ours. And at ages 55 and over the gaps are very large.
I would caution that for some of the P's, particularly productivity, one can get somewhat different cross-country comparisons using just the latter half of the 1990's as the time period of analysis, rather than using the 1990's as a whole.
For Discussion. As populations age, will countries need to consider raising the retirement age in order to maintain growth in GDP per capita?