Addressing demographic headwinds in Japan: A long-term perspective

Randall S. Jones

No 1792, OECD Economics Department Working Papers from OECD Publishing

Abstract: Japan faces serious demographic headwinds. Under current fertility, employment and immigration rates, the population would fall by 45% by 2100 and employment by 52%. Given the challenges of a shrinking and ageing population, the government has pledged to “create a children-first economic society and reverse the birth rate decline”. One priority is to strengthen the weak financial position of youth, which leads many to delay or forgo marriage and children. Making it easier to combine paid work and family is also critical so that women are not forced to choose between a career and children. Policies should also cut the cost of raising children, the key obstacle to couples achieving their desired number of children. Given the challenge of reversing fertility trends, Japan needs to prepare for a low-fertility future by raising productivity and employment, particularly among women and older people. Breaking down labour market dualism, which disproportionately affects youth, women and older people, is a priority. Abolishing the right of firms to set a mandatory retirement age (usually at 60) and raising the pension eligibility age would also promote employment. Foreign workers are helping ease labour shortages, but more needs to be done to attract foreign talent. A comprehensive approach is needed to raise fertility, the employment rates of women and older persons and inflows of foreign workers.

Keywords: dualism; female employment; fertility rate; foreign workers; Labour market; mandatory retirement; non-regular workers; older workers; pension eligibility age; population ageing; work-life balance (search for similar items in EconPapers)
JEL-codes: J1 J2 J3 J7 J8 (search for similar items in EconPapers)
Date: 2024-04-24
New Economics Papers: this item is included in nep-age and nep-lab
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