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From Boom To Bust? Population Crisis In Japan Explained

Explore the population crisis in Japan: its declining birth rates, aging society, and economic challenges. Learn about the nation’s demographic dilemma.

Author:Dexter Cooke
Reviewer:Frazer Pugh
Sep 27, 2023
The population crisis in Japanseems to eclipse the radiance of this nation also known as the Land of the Rising Sun.
Japan, a land of rich traditions and technological marvels, has long been admired for its unique blend of ancient culture and modern innovation.
However, beneath the surface of this remarkable nation lies a pressing population issue that has been steadily intensifying over the past few decades.
In this exploration, we will delve into the intricacies of the population crisis in Japan, examining the details of this complex issue.

Is Japan Having A Population Crisis?

Japan’s population faces several interconnected demographic challenges, which are often referred to as “population problems” or “population issues.”
These issues have been a subject of concern for several years and can have wide-ranging implications for the country’s:
  • economy
  • society
  • government
Some of the key problems with Japan’s population include:
1. Aging Population
Japan has one of the oldest populations in the world.
The Washington-based Population Reference Bureau said that, based on 2019 resources, there were approximately 35.5 million people (or 28.2 percent of the population) aged 65 and above in Japan.
Per Statista, it increased to 29.8 percent in 2021.
An old Japanese couple wearing hats and standing in front a pedestrian crossing in Kyoto, Japan
An old Japanese couple wearing hats and standing in front a pedestrian crossing in Kyoto, Japan
The country’s birth rate has been consistently low for decades, leading to a rapidly aging society.
Japan Prime Minister Fumio Kishida said that the estimated number of births in 2022, was below 800,000, reported The Guardian.
As there are fewer working-age people to support the growing elderly population, this demographic trend has significant consequences for:
  • healthcare
  • pension systems
  • the labor market
2. Low Birth Rate
Japan’s birthrate is well below the replacement rate (the rate at which a population can replace itself without immigration).
According to a 2023 article by Harvard International Review, Japan has one of the lowest birth rates in Asia, with a fertility rate of 1.3.
Even Elon Musk couldn’t resist expressing his concerns regarding the population crisis in Japan. In May 2022, the Tesla and SpaceX CEO tweeted:
Unless something changes to cause the birth rate to exceed the death rate, Japan will eventually cease to exist. This would be a great loss for the world.- Elon Musk
In 2021 - for the 11th consecutive year - Japan’s population went down, according to The Guardian. It declined by 644,000.
Factors contributing to the low birthrate include:
  • high living costs
  • limited support for working parents
  • long working hours
  • changing societal attitudes toward marriage and family
Regarding living costs, Japan’s Ministry of Internal Affairs and Communications provided estimated monthly living expenses of men and women in 2021.
The table below shows these figures, taken from an article by LIMO Media (U.S. Dollar conversion as of September 25, 2023):
A. Men and Women
Their average monthly living expenses: 155,912 yen (approximately $1,050).
Age GroupEstimated Monthly Living Expenses
34 years old152,742 yen (approx. $1,029)
35-59 years old181,591 yen (approx. $1,224)
60 years old and over143,977 yen (approx. $970)
65 years old and over141,913 yen (approx. $956)
B. Men
Their average monthly living expenses: 155,823 yen (approx. $1,050).
Age GroupEstimated Monthly Living Expenses
34 years old151,472 yen (approx. $1,021)
35-59 years old182,962 yen (approx. $1,233)
60 years old and over133,866 yen (approx. $902)
65 years old and over132,650 yen (approx. $894)
C. Women
Their average monthly living expenses: 155,989 yen (approx. $1,051).
Age GroupEstimated Monthly Living Expenses
34 years old154,469 yen (approx. $1,041)
35-59 years old179,398 yen (approx. $1,209)
60 years old and over149,341 yen (approx. $1,006)
65 years old and over146,504 yen (approx. $987)
Per an article by Line Mobile (updated as of March 2021), here’s an estimated breakdown of monthly expenses for single people in Japan (again, U.S. Dollar conversion as of September 25, 2023):
Breakdown of Average Monthly ExpensesEstimated Cost
Rent45,000 yen - 65,000 yen (approx. $303 - $438)
Utility Bills7,000 yen - 10,000 yen (approx. $47 - $67)
Food25,000 yen - 40,000 yen (approx. $168 - $269)
Communication Fees (phone, Internet)8,000 yen - 12,000 yen (approx. $53 - $80)
Entertainment10,000 yen - 20,000 yen (approx. $67 - $134)
Others/Miscellaneousfrom 15,000 yen (approx. $101)
3. Shrinking Workforce
With an aging population and a declining birthrate, the population crisis in Japan leads to a shrinking workforce.
Bloomberg reported that by 2040, Japan could be short of workers. How many? By over 11 million workers.
This can hamper economic growth and productivity as there are fewer people available to participate in the labor market and support economic activities.
Male Japanese office workers in suits walking in the pedestrian crossing at daytime in Shinjuku, Japan
Male Japanese office workers in suits walking in the pedestrian crossing at daytime in Shinjuku, Japan
As Eurasia Group’s David Boling, its director for Japan and Asian Trade, told GZERO Media in an interview in January 2023:
Japan has to squeeze more and more productivity out of fewer and fewer people.- David Boling
Now although Japan is known for its advanced technology, such cannot fully help it in its population problem. As Boling added:
Technology, artificial intelligence, and robotics can help gain back some of that lost productivity. But it can only go so far.- David Boling
4. Economic Challenges
An aging population can create economic challenges, including:
  • increased healthcare costs
  • rising elderly care demands
  • a potential decline in consumer spending
According to Statista, as of April 2022, the long-term elderly care in a nursing facility in Japan incurs an estimated monthly expense of 313,700 yen (approx. $2,114).
In October 2022, the medical expenses not covered by insurance of people aged 75 and above and with a yearly salary of no less than 2 million yen increased by 20 percent, reported Nikkei Asia.
In Thinking About the 2025 Problem - Part 1: Population Change and the 2025 Problem, a paper republished by Tokyo-based Nakasone Peace Institute (NPI), Professor Takao Komine, a senior research fellow at Japan Center for Economic Research since 2010, said that the population crisis in Japan covers these important concerns:
  • “economic growth”
  • “inequality”
  • “poverty”
  • “social security”
Japan also faces a fiscal challenge in sustaining its social welfare programs, given the growing number of retirees and a shrinking tax base.
5. Gender Inequality
Japan has a significant gender gap in the labor market, with women often facing limited opportunities for career advancement and work-life balance.
For long-term economic prosperity, Japan needs to:
  • address gender inequality
  • allow more women in the workforce
6. Reluctance Towards Immigration
Japan has traditionally been reluctant to embrace large-scale immigration as a solution to its demographic challenges.
While there have been some recent policy changes to allow more foreign workers into the country, Japan’s approach to immigration remains cautious compared to other developed nations.
7. Rural Depopulation
Many rural areas in Japan are experiencing significant depopulation as young people move to urban centers for better employment opportunitiesand lifestyles.
This leaves behind aging populations in these areas and poses challenges for local economies and infrastructure.
8. Social and Cultural Factors
Some social and cultural factors may discourage people from having more children or pursuing alternative family structures.
They include:
  • emphasis on conformity
  • long working hours
  • traditional family values
9. Education Costs
The cost of education, including private tutoring and extracurricular activities, can be expensive - too prohibitively costly - for families.
This can make raising children a daunting financial prospect.
10. Housing Costs
The high cost of housing, particularly in urban areas like Tokyo, can discourage young couples from starting families or having more children.
They may not have the space or resources to accommodate larger families.
To address these population problems, the Japanese government has implemented various policies and initiatives, such as:
  • promoting work-life balance
  • increasing support for elderly care
  • offering financial incentives for families to have more children
However, addressing these complex demographic challenges requires ongoing efforts.
As Prime Minister Kishida said in January 2023 and quoted by The Guardian:
Japan is standing on the verge of whether we can continue to function as a society.- Prime Minister Fumio Kishida
Fundamental shifts in societal norms and policies should also be taken to resolve the population crisis in Japan.

Japan Population 2023

As of publication, per Worldometer, Japan’s population in 2023 is at approximately 123,137,600.
The country’s highest population was recorded in 2008: an estimated 128.1 million. It remained within that range until 2010 and has since declined in the coming years.
See the table below to know how the country’s population increased and decreased in the last five decades:
YearPopulation Estimate
1970105.4 million
1980117.6 million
1990123.6 million
2000126.8 million
2010128.1 million
2020125.2 million
In a 2020 report titled Japan’s Ageing Societyprepared by the European Union, it stated that the country struggles with the reality that while fertility rate is low, life expectancy is high.
Japan, at the time the report was released, had 80,000 people aged 100 years old and above. Then, it’s estimated that a third of Japan’s population will be those aged 65 and above by 2036.
That can even be an understatement as the report described Japan as a “rapidly aging country” with a “‘super-aged’ society.”
According to Nikkei Asia, the population crisis in Japan will worsen as latest data projected that it could reach 87 million in 2070.
Below are projections for the next five years courtesy of Statista:
YearPopulation (Projected Estimate)
2024124.04 million
2025123.43 million
2026122.8 million
2027122.14 million
2028121.46 million

Japan Population Problem Solution

Fixing the population crisis in Japan involves a complex and long-term process that requires a multifaceted approach.
Here are some strategies and proposed solutions that Japan should consider to address its population decline:
a. Promote Family-Friendly Policies
Implement policies that make it easier for families to have children.
They could include financial incentives, such as:
  • direct cash payments to parents
  • tax breaks for families with children
  • subsidies for childcare services
These measures aim to reduce the financial burden of raising children and encourage couples to have larger families.
A Japanese mother pushing her baby in a stroller, with baby’s grandmother in a pedestrian crossing in Tokyo
A Japanese mother pushing her baby in a stroller, with baby’s grandmother in a pedestrian crossing in Tokyo
b. Improve Work-Life Balance
Japan’s demanding work culture often discourages couples from having children.
Encouraging a better work-life balance through policies can make it more feasible for couples to both work and raise children. These policies can be about:
c. Increase Immigration
Japan could allow for increased immigration to boost its working-age population.
This would involve relaxing immigration policies and welcoming foreign workers to fill labor gaps in various industries. However, this approach also raises questions about:
  • cultural integration
  • societal cohesion
d. Enhance Gender Equality
Empower women in the workforce by eliminating gender discrimination and bias.
Policies can encourage women to have more children without sacrificing their careers. These policies can be in the form of:
  • addressing the gender pay gap
  • improving access to affordable childcare
  • promoting women in leadership positions
e. Support Regional Revitalization
Encourage people to move to less populated areas of Japan by providing incentives, such as:
  • tax breaks
  • job opportunities
  • improved infrastructure
This can help balance population distribution and reduce the strain on major urban centers.
f. Invest in Healthcare and Elderly Care
As the population ages, the need for healthcare and elderly care services rises. Investing in these sectors can create jobs and ensure a higher quality of life for elderly citizens.
Couples will feel less daunted to have children knowing their parents will be cared for.
g. Promote Technology and Automation
Increasing automation in industries can offset the need for a large working-age population. This can help maintain economic productivity with a smaller workforce, but it may also lead to job displacement.
h. Encourage Delayed Retirement
Encourage people to work past the traditional retirement age by providing:
  • incentives
  • phased retirement options
This can help maintain a stable workforce and reduce the burden on social security systems.
i. Educational Reforms
Reform the education system to prepare students for the demands of the modern workforce and encourage innovation.
This can lead to higher productivity and economic growth, which may mitigate some of the effects of population decline.
j. Support for Singles
Recognize that not everyone will marry or have children.
Create social and economic support systems for single people, including affordable housingand social activities.

People Also Ask

What Is The Population In Japan 2025?

Per Statista, the forecasted population of Japan in 2025 is approximately 123.43 million.
In the same paper mentioned earlier, the one published by NPI, Prof. Komine, who is also a senior research counselor at NPI since 2017, wrote:
Why focus on 2025? The most important reason is that it will be around then that population changes will begin to occur in ways that present something of a new dimension to the problem.- Professor Takao Komine
According to Prof. Komine, by 2025, Japan will have several “advanced elderly,” or those who are aged 75 and up.

Is The Majority Of The Population Poor Or Wealthy In Japan?

In 2022, per Worldometer, Japan’s population was approximately 123.9 million.
According to the Statista Research Department, in 2022, the number of high-net-worth individuals (HNWIs) in Japan numbered approximately 2.6 million.
In general, as Investopedia explains, an HNWI has liquid financial assets - assets that can be easily converted into cash - worth at least $1 million (U.S. dollar).
Japan’s HNWIs possess a net worth of somewhere between $1 million and $10 million (U.S. dollar).
In 2020, based on data by Statista, 53 percent of Japan’s population had wealth amounting somewhere between $100,000 and $1 million (U.S. dollar). Then 33 percent had wealth amounting somewhere between $10,000 and $100,000.
Therefore, in 2020, an estimated 86 percent of Japan’s population were not poor.

What Are The Main Factors That Control The Population?

A demographer is a social scientist who specializes in the study of demographics, which is the statistical analysis of human populations.
Based on the Chapter 1 of an April 2015 report titled The Future of World Religions: Population Growth Projections, 2010-2050 and can be found on the website of Pew Research Center, demographers look into the following four key factors:
  • “fertility rates”
  • “mortality rates (life expectancy)”
  • “the initial age profile of the population (whether it is relatively old or relatively young to begin with)”
  • “migration”

Final Thoughts

The population crisis in Japan is a multifaceted challenge that demands a comprehensive understanding and thoughtful solutions for a nation at a crossroads.
Its rapidly aging population, declining birth rates, and a shrinking workforce make this demographic challenge a tough one.
Not to mention, the impacts on healthcare and pension systems and the evolving cultural norms and immigration policies only add up to the challenge.
Dealing with the population crisis in Japan will have profound implications for the country’s economy, social structure, and future sustainability.
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Dexter Cooke

Dexter Cooke

Dexter Cooke is an economist, marketing strategist, and orthopedic surgeon with over 20 years of experience crafting compelling narratives that resonate worldwide. He holds a Journalism degree from Columbia University, an Economics background from Yale University, and a medical degree with a postdoctoral fellowship in orthopedic medicine from the Medical University of South Carolina. Dexter’s insights into media, economics, and marketing shine through his prolific contributions to respected publications and advisory roles for influential organizations. As an orthopedic surgeon specializing in minimally invasive knee replacement surgery and laparoscopic procedures, Dexter prioritizes patient care above all. Outside his professional pursuits, Dexter enjoys collecting vintage watches, studying ancient civilizations, learning about astronomy, and participating in charity runs.
Frazer Pugh

Frazer Pugh

Frazer Pugh is a distinguished expert in finance and business, boasting over 6 years of experience. Holding an MBA in Finance from Stanford University, Frazer's credentials underscore his authority and expertise in the field. With a successful track record in executive roles and as a published author of influential articles on financial strategy, his insights are both deep and practical. Beyond his professional life, Frazer is an avid traveler and culinary enthusiast, drawing inspiration from diverse cultures and cuisines. His commitment in delivering trustworthy analysis and actionable advice reflects his dedication to shaping the world of finance and business, making a significant impact through his work.
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