Japan’s aging population and plummeting birth rate offer a peek at why policies need to shift around the world.
Fifty years ago, Japan became one of the first countries to see its official fertility rate fall below the 2.1 children per woman needed to keep its population stable. At the time, few foresaw the profound impact of this government statistic. Today, Japan is grappling with labor shortages, shrinking towns, and millions of abandoned homes.
These challenges are now forcing shifts not only in social policies and technology but also in Japan’s long-standing approach of minimal immigration. Japan has now begun to accept hundreds of thousands of foreign workers to fill critical workforce gaps.
This transformation is just the beginning of a global trend. The United States and other countries are also similar demographic challenges, with declining birth rates and aging populations reshaping economies, labor markets, and political priorities. As these pressures intensify, governments may need to rethink long-held policies and norms. Japan’s experience suggests that depopulation disrupts economies – and upends politics-as-usual, creating new divides. But these shifts also create opportunities for previously unthinkable measures, like increased immigration. Demographics, for better or worse, could profoundly reshape societies.
The reality of declining fertility and aging
Ever since the publication of Thomas Malthus’ influential “Essay on the Principle of Population” in 1798, scholars have warned that unchecked population growth could outstrip resources, causing famine and societal collapse. While the Industrial Revolution mitigated these fears through technological advances, overpopulation anxieties persisted. These anxieties have driven controversial policies such as China’s one-child policy and forced sterilization campaigns, influenced by Paul Ehrlich’s 1968 bestseller, The Population Bomb. These dire predictions, however, ultimately failed to materialize.
But now, the realities of population decline are a growing concern around the world. U.N. projections suggest that the global population will peak at 10 billion by the 2080s, with Europe peaking within a few years and Asia by the 2050s. This decline is primarily driven by falling fertility rates, further exacerbated by aging populations. Currently, most of the world’s population resides in countries with fertility rates below replacement level and a median age over 35, where not enough children are born to offset deaths among the older generation. High-income countries, except Israel, are aging rapidly. And none of these countries maintain replacement-level fertility.
What depopulation means for society
Some environmentalists and “degrowth” advocates see population decline as a benefit. On the plus side, shrinking populations mean reduced pollution and congestion, and new opportunities for technological change or societal transformation, Yet depopulation clearly poses significant challenges. Fewer people mean fewer workers to pay taxes and support retirees. Dependency ratios – measuring the number of retirees supported by working-age people – are set to worsen. Currently, every old-age person is supported by three working-age people, on average. But that ratio is projected to drop to just two workers per retiree by 2050 in high-income countries. And this trend threatens the sustainability of pensions, welfare systems, and economic growth as fewer people innovate or address global challenges.
Japan, alongside neighboring South Korea, is leading the world on all of these trends. Japan’s population peaked in 2008. Its working-age population began shrinking in the 1990s. Fertility rates have been below the 2.1 replacement level for over 50 years. More than 20 percent of people in Japan have been above age 65 for over 20 years, with Japan now claiming the highest level of old-age dependency ratio in the world. Depopulation in rural areas is particularly dire, leaving millions of abandoned houses and thousands of elderly residents dying alone or underserved as businesses and services close down.
While most economists believe these trends are detrimental to a functioning economy that needs workers, some even argue that Japan’s decline in its working population explains nearly all of its economic underperformance over the last 30 years. Between 1991 and 2019, Japan’s economy – measured as the GDP growth per capita – grew much more slowly than the U.S. When looking at GDP growth per working-age adult, however, the gap between the two countries is much smaller. This shows that Japan’s slow overall growth is mostly due to its declining working-age population.
Japan tried to boost birth rates but with little success
Japan was perhaps the first country to recognize “shōshi kōreika” (low birth rate and aging population) as a public problem, becoming the world’s laboratory for drawing policy lessons on population decline. In 1990, when Japan was still at its height as the second-largest economy in the world, the government reported that the fertility rate had fallen to 1.57, surpassing the superstition-induced low of 1966, when many couples avoided having daughters born under the “fire horse” zodiac sign. Since then, many commentators and scientists have been preoccupied with population decline, the public has consistently rated it as among the most important problems facing their country, and government officials began rolling out policies to get people to have more babies.
These policies included mandating up to a year of childcare leave, expanding subsidized daycare, encouraging men to take leave and share housework, and promoting shorter work hours. In 1992, the Japanese government introduced cash allowances for families with children. Most recently, in June 2023, Prime Minister Fumio Kishida’s administration launched the “Direction on Strategy for Children’s Future,” aiming to reverse declining birth rates by increasing child allowances and enhancing financial support for childbirth, childcare, and education. The government also plans to start giving “baby bonuses” of 100,000 yen ($670) to expecting mothers starting next year.
On paper, it looks like the Japanese government has taken every possible measure to combat low fertility with little effect, but the public thinks it could do more. The current expanded monthly child allowance is only 15,000 yen or $100, which is insufficient to support children, especially in big cities like Tokyo. At the same time, despite parental leave policies applying to fathers too, men rarely use them due to a combination of social stigma against it or fear of being laid off.
Research shows that the most significant drivers of fertility declines worldwide are positive societal changes, such as women’s empowerment through education and workforce participation, and the increasing value placed on children’s well-being. Consequently, many scholars argue that while financial incentives may have some impact, they are unlikely to be effective without deeper cultural shifts that address the trade-off women face between family and career or encourage people to value having more children for their own sake.
Depopulation forced Japan to embrace foreign workers
Japan’s demographic challenges have spurred a broad range of corporate initiatives to develop technological solutions like robotics and AI. This positioning, along with government support, has helped make Japan a global leader in robotics and automation. In part, Japan’s historically low immigration made these efforts necessary, in contrast to other countries. However, automation has its limits, particularly in sectors of the economy that involve human care and personal interaction.
For many years, the conventional wisdom has been that Japan is an ethnically homogeneous country that simply can’t accept foreigners due to its ingrained xenophobia. Radical right politicians and activists around the world glorified this image, seeking immigration bans in their own countries. However, it’s increasingly clear that this perception no longer holds true – perhaps for quite some time.
And Japanese seem OK with that
Japan’s foreign workers have quadrupled since 2007 to more than 2 million, a remarkable shift considering the country’s long history of minimal immigration. Facing depopulation and acute labor shortages, in March 2024 the government announced a number of new visa programs for skilled and semi-skilled workers. The goal: accept at least 800,000 more people over the next five years.
As journalist Martin Gelin explains, “Japan radically increased immigration – and no one protested.” And most of this happened under the dominant conservative Liberal Democratic Party government. Economists estimate that Japan, however, alongside other countries facing depopulation like South Korea, would have to increase labor mobility even more in order to maintain or improve their current standard of living.
Japan’s foreign-born population – currently at 3% – is still the lowest among OECD countries, but it is a significant increase from under 1%, the rate for most of Japan’s modern history. Many Japanese, especially outside Tokyo, may have ha never met a foreigner before. However, this is changing as foreign workers are increasingly employed in convenience stores, running businesses, and providing care for the elderly.
While Japan’s incremental approach – favoring temporary over permanent immigration – has faced criticism, this strategy likely helped minimize political backlash and ensure public support for increased admissions. Whether this support holds or whether the public would be willing to embrace more permanent immigration pathways as immigration continues to rise remains to be seen.
What this means for the U.S. and other democracies
Japan’s demographic challenges offer a preview for other high-income democracies also facing declining birth rates and an aging population. Across Europe, East Asia, and North America, shrinking working-age populations, unfilled jobs, and depopulating towns are prompting governments to adopt measures like parental leave, childcare subsidies, and cash transfers.
The share of countries with deliberate pro-natal policies rose from 10% in 1976 to 28% by 2015. Typically, these policies include benefits like extended parental leave and financial incentives such as child allowances or tax breaks. Yet even policies like this, even when paired with automation, are unlikely to fully reverse population decline. Some economists estimate that, as populations in rich countries shrink and grow older, these countries will collectively need at least 450 million new immigrant workers to help with the burden of providing for the elderly.
Lant Pritchett, a development economist, succinctly captures this modern paradox: “Mass immigration is demographically essential but politically impossible.” His statement underscores a significant barrier: Populist leaders in many countries exploit people’s skepticism about immigration, complicating the adoption of immigration policies that are essential for demographic stability. Fortunately, the scenario in Japan and other countries suggests, public backlash to rising immigration numbers is not inevitable.
As depopulation around the world becomes harder to ignore, these forces may create new political divides over how governments should handle the depopulation challenge. While some politicians and activists already advocate for economic incentives, such as child tax credits, to encourage population growth, others propose more coercive measures like restricting speech, imposing a greater tax burden, or other penalties on childless adults.
In the United States, falling birth rates are already a polarizing issue. Proposals range from expanded tax credits to cultural critiques, such as Vice President JD Vance’s controversial call to promote childbearing among American women.
Ultimately, how countries respond to depopulation will shape their futures. Japan’s approach to embracing immigration illustrates one potential response, underscoring the importance of addressing demographic challenges proactively before they escalate to crisis levels.
Alex Kustov is a 2024-2025 Good Authority fellow.
The post The coming politics of population decline appeared first on Good Authority.