Of all the problems Japan is facing, the one that may pose the biggest challenge is the decline in its population, the result of social and economic factors that some observers say the country appears unwilling or unable to tackle in any meaningful way.
Japan’s population began falling in 2011. According to the most recent estimate by the National Institute of Population and Social Security Research (NIPSSR), it will fall to 97 million by 2050 from 127.50 million in 2012, a figure that is based on the 2010 birthrate of 1.39 children per couple. By 2100, the population could fall below 50 million, says Ryuichi Kaneko, a population expert and deputy director of the institute. “But even if we are able to raise the birth rate to 2.07, our population will still continue to fall through 2050 and 2100.”
At the same time that the population is shrinking, it is also aging. Japan’s famed longevity coupled with the low birth rate will leave the country with a much smaller working-age population just as the number of elderly residents peaks. Those over 65 now account for about a quarter of the population. By 2050, the over-65s will account for 38.8% of the population, rising to 41.1% by 2100, according to NIPSSR. “The population problem is one of the most difficult and intractable issues that Japan has to deal with,” says Wharton finance professor Franklin Allen.
Originally Published May 21, 2014, by Knowledge@Wharton.