Health

Tackling Japan’s dual crisis: How policies, culture and values can help stabilise the fertility rate and enable economic development

July 19, 2022

Asia

Tackling Japan’s dual crisis

July 19, 2022

Asia
Alan Lovell

Senior manager, Policy and insights

Alan is a senior manager in the health team at Economist Impact. Alan has a degree in Biology from Royal Holloway, University of London, and gained his doctorate from the University of Warwick. He worked as a Postdoctoral Research Fellow at Sainte-Justine Hospital, University of Montreal before receiving an MA with distinction in Information Studies from the University of Brighton. Alan has advised and worked on a range of projects for governments, health ministries, manufacturers, providers, insurers, academic journals, research funders and sporting associations.

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Japan’s total fertility rate (TFR, the average number of children born per woman) continues to decline, dropping to 1.34 in 2020, well below the replacement rate of 2.1.
Japan already has the world’s oldest population, with a dependency ratio (the share of individuals over the age of 65 relative to the size of the working age population) of nearly 50% compared to a world average of 14%. A further fall in the number of births means the number of working adults supporting the ageing population will shrink, and the economy will face further challenges.
 
We have developed a model to assess the economic and demographic implications of different projected fertility rates in Japan between 2020 and 2100. The outputs of the model include population projections, old-age dependency ratios and national GDP. We found that even with our most optimistic TFR scenario, the population size will have declined by the end of the century. However, any increase in the fertility rate can bring economic benefits.
 
Many challenges remain in increasing fertility rates. Although Japan has unveiled a series of policies and subsidies to support child-rearing, the financial investment involved has been insufficient. This is especially so in comparison with some western European countries. Also, Japan has a very rigid working culture, with long working hours and few options for part-time work. At the same time, high living costs in urban areas often requires young couples to maintain two incomes.
 
There are cultural factors too. Because women are still responsible for the bulk of child-rearing and housework in Japan, marriage is a particular burden for young women. These and other factors have driven down the marriage rate, from over 10 per 1,000 in the early 1970's to 4.8 per 1,000 in 2019.
 
Our report explores these issues and suggests some key takeaways around which successful policies could be built. 
 
Editorial note: Alan Lovell was the editor of the report. The development of the model, and the analysis of its results, was led by Shivangi Jain, Manager and economist, Policy and insights.

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