Is Decline on the Horizon for Japan ?

Aging, Family Support Systems, Saving and Wealth: Is Decline on the Horizon for Japan? Andrew Mason, Naohiro Ogawa, and Takehiro Fukui October 7, 2004 In many industrialized nations, fertility rates are now below the level of replacement, and life expectancy at birth has reached 80 years in a few select countries. As a result, population age distributions are changing markedly, with a relative increase in the numbers of elderly and a relative decrease in the numbers of young. Demographic developments in Japan are similar in important respects to those occurring among industrialized countries of the West. Japan’s demographic transition began more recently and has proceeded more rapidly. The total fertility rate is currently below 1.3 births per woman, and life expectancy at birth is higher than in any other country. Although a number of Western European populations are older, the percentage of Japan’s population 65 or older is increasing rapidly and is expected to accelerate towards the early part of the next century (Ogawa, 1996). UN projections anticipate that 36% of Japan’s population will be 65 or older by 2050 as compared with 20% of the U.S. population (United Nations, 2003). An overwhelming majority of the Japanese people believe that a variety of social and economic changes will be necessary to accommodate rapid aging. In business circles, for instance, there has been concern about the implications of a slower-growing and older labor force (Clark and Ogawa, 1993, 1996). Government officials are concerned about the future viability of old-age pension schemes and the growing burden