Fertility in Japan

Regular readers of Alpha.Sources will know that my economic analysis of Japan is anchored in the understanding and essentially awareness of how demographics affect the macroeconomic environment. One of the key macroeconomic indicators is the median age and here Japan is extraordinary in the sense that the Japanese people is the oldest population on earth with a median age of 42.6. In an overall sense we can say that the ageing of Japan's population and indeed the ageing of the entire OECD world is driven by two factors; declining fertility and increasing life expectancy. This post is quick pointer to the former parameter in a Japanese context.

Japan's fertility is indeed low and even slightly below the 1.3 mark which signifies lowest-low fertility. This clearly has  implications for the Japanese society and economy but going out of 2006 we should note that fertility actually increased a small bit in 2006.  

The number of births for 2006 has been estimated at 1,086,000, an increase of 23,000 from a year earlier.

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The fertility rate - the average number of children a woman bears in her lifetime - was expected to be 1.29 in 2006, compared to the record low of 1.26 in 2005.

However, it is as also noted in the short BBC.News article pretty small beef and the general projections still look dire for Japan.

But the health ministry expects the rate to fall this year and continue a downward trend that may see a 30% drop in the population in the next 50 years.

Japan has the highest number of elderly people and the lowest number of young as a percentage of its population.

Another article from BBC.News from December also note the severity of the general projections.

The report says the current population of about 127m is projected to sink below 90m by 2055. By that date the proportion of the population aged above 65 is set to double to 40.5%. Prime Minister Shinzo Abe pledged to bring in policies that would prevent further falls in birth rates.  Correspondents say the current trend is caused by women marrying later in life and having fewer children.

In 2005 for the first time since World War II the Japanese population declined, the survey by the National Institute of Population and Social Security Research for the ministry of health noted.

For a more detailed description of Japanese fertility I recomment a recent article in the Japanese Journal of Population by Toru Suzuki which tackles the developments in Japanese fertility and policies.

Japan’s TFR in 2004 was 1.29, which is “lowest-low” fertility, i.e. having a TFR of 1.3 or less. It seems to be impossible for cohorts born after 1960 to achieve the complete fertility of their predecessors. The delay in childbearing was accelerated again after 2000.

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The Japanese government has been adopting pronatal measures since the early 1990s but has not succeeded in preventing fertility decline Measures applied by the central government include expansion of child allowance, introduction of childcare leave, improvement in childcare services, etc. However, pronatal measures are not as effective as expected. Quantitative analyses show that it is very difficult to elevate the TFR by 0.1 with policy interventions.

Note also this from the introduction ...

Japan is now entering a new demographic phase. After the population growth that tripled the Japanese population during the 20th century, the period of population decline is about to start. Although the official population projection (NIPSSR, 2002) foresees that the period between October 2006 and October 2007 will mark the first population decrease, the vital statistics recorded a natural decrease in the first half of 2005. If the annual number of deaths eventually exceeds that of births and is not compensated for by the net immigration, Japan will become a country with a declining
population this year.

The next step here would then be to think about what this means for the macroeconomic reality in Japan and how our analysis should reflect this.