Japan’s population falls by the largest amount ever recorded

Posted on April 19, 2013 by Madsen Pirie

Japan’s population dropped last year by over a quarter of a million (0.2%), the largest fall since accurate recordings began. There was a net surplus of deaths over births, and a net surplus of emigrants over immigrants. The population is aging, too. Children up to age 14 constituted only 13.1%, while the proportion at 65 or over is 23.3%. Do the figures tell us anything?

Yes they do. To some extent all countries have lower birth rates as they become richer. Initially their population increases as medical advances enable people to live longer and fewer die in infancy. People in poor countries tend to have many children because not all survive, because their contribution to the family economy is needed, and because they can support their parents when they become old. However, once the prosperity beds in, people do not need large families to ensure that some survive, do not need their economic contribution, and have social services to support them in old age instead of depending on their children. Thus in advanced economies the population is decreasing, notably in Europe. In some countries immigration makes up for the decline in indigenous population. The fear of the world drowning in overpopulation is misplaced, and the present 7bn is likely to level off at 10bn, a figure the planet can sustain with food, water and resources.

The problem comes for countries in which the young support the old. If pensions, for example, redistribute funds from today’s contributors to today’s recipients, the ratio of burdens to shoulders obviously matters. If pensions are paid instead from funds that are invested, their capital provides the wherewithal for increased investment in productivity to enable payment to be made from their dividends. Similarly, if governments have borrowed heavily to provide services for the current generation, reduced numbers of children in future might mean they are unable or unwilling to service or to repay those debts.

The moral of the story is that governments should keep a close eye on their population demographics, and formulate policies that can handle any long-term changes that are occurring. Moving over to individual pension funds is one such policy, and reducing national indebtedness is another. There are implications, too, for housing stock, public transport and the provision of healthcare. Smaller populations mean changed needs, especially if they are going to be older populations.