Social Implications of Demographic Change

Declining population as well as population aging has substantial impacts on the economy and on the society. By contrast, the size of the population usually does not matter for economic development, if it is stable; Switzerland and Sweden, for example, are rich countries with fewer than 10 million people. However, the process of declining does matter, particularly when it is accompanied by a significant change in the age structure. The aging of the population is a more serious issue in Japan than in any other OECD country. First, the speed of aging has been more rapid there, reflecting the rapid economic development in the past, which has been similar to that in other Asian countries (Figure 1). Second, the social system in Japan is heavily dependent on seniority rules, based on the pyramid-like age structure of the past. Third, human resource allocation in Japan is constrained by the fixed social roles for men and women, both at work and at home.