Since the late 2010s, the total fertility rate (the average number of children a woman gives birth to during her lifetime) has started to decline again, fueling a sense of crisis over the shrinking population of children. Furthermore, as a result of the population decline, it is becoming more and more important to make efficient use of the labor provided by the working-age generations, including married women. These are in no way new challenges: over the past several decades, various policy measures have been discussed and implemented, including providing support for reconciling childcare with work, and assistance for childbearing families. However, until now, the effects of those policy measures have not been sufficiently reviewed.
A RIETI project “Evaluation of the Effects of Institutional and Environmental Factors on Family Formation, Parental Labor Market Performance and Children's Academic Performance” has conducted research with the aim of providing evidence that can form the basis of better policy planning with a particular focus on matters such as the family formation of working-age and childbearing generations, the performance of those generations in the labor market, and human capital formation among younger generations and children.
Expanding nursery capacity raises mothers’ annual income and the birthrate
Fukai and Kondo (2025) measured changes in mothers’ income during the period before and after giving birth to their first child based on residential tax records. Steep declines in mothers’ employment rate and annual income after giving birth to their first child, known as the “child penalty” or “motherhood penalty,” have been observed in countries around the world, and Japan is no exception. While it should be kept in mind that the data used by Fukai and Kondo (2025) was not nationwide random sample data, it was found that mothers’ salary income immediately after giving birth was as much as 80% lower than the level two years before childbirth and that on average, mothers’ income four years after childbirth remained at 50% of the pre-childbirth level. Given that the average employment rate four years after childbirth was down only 20%, the finding suggests that many mothers face salary level losses despite remaining employed. However, it should be kept in mind that around half of the mothers give birth to a second child before their first child reaches four years of age, which means it is necessary to also take into consideration the effects of the presence of an unpaid period during which the mothers take childcare leave, and therefore, a review based on longer-term data is required.
Looking at the distribution of income after childbirth based on pre-childbirth income categories, we can see that after giving birth, many mothers with a relatively low income before childbirth kept their income below the threshold for dependents for taxation purposes, while mothers with a relatively high level of income before childbirth were divided into two groups—a group of mothers whose income recovered to a level similar to the pre-childbirth level after several years and a group of mothers whose income remained very low. This presumably indicates that mothers in the first group resumed working as regular employees after finishing a period of childcare leave.
If mothers are to resume working as regular employees after finishing a period of childcare leave, nursery services are essential. Fukai and Toriyabe (2025) reviewed the effect on the birthrate of building more nurseries. Specifically, they estimated the effect of an increase in total nursery capacity on the birthrate based on data obtained by linking birth records from the Vital Statistics and the Population Census with survey data concerning social welfare facilities at the municipal level. As a result, it was found that a 100% increase (doubling) in total nursery capacity leads to a rise of 9% in the annual birthrate. The effect was not unduly concentrated within particular age groups, and neither the ratio of low-birth-weight babies nor premature births was affected. Between 1990 and 2020, total nursery capacity increased 70%, and the increase is estimated to have had the effect of raising the total fertility rate by 0.097 points. Given the drop of 0.2 points in the total fertility rate in the 30-year period, it may be said that the expansion of total nursery capacity had a non-negligible impact on mitigating the shrinkage of the child population.
The need for unprejudiced exploration of the causes of the shrinkage in the child population
However, in the long term, it is true that the birthrate has continued to decline, and moreover, in recent years, the decline has been accelerating again. Although there have been various discussions and studies as to the underlying cause of that trend, no clear answer has been found.
The view is spreading that, since the bursting of economic bubbles in the 1990s, the instability of the youth employment situation has accelerated the shrinkage of the child population. Kondo (2024) has cast doubt on this popular theory. The generation of people who were born around 1980 graduated from school in the early 2000s, when the hiring situation was most difficult for job seekers, and thereafter, they experienced a prolonged period of greater job instability and lower income compared with older generations. However, Kondo pointed out that based on Vital Statistics and the Population Census, the numbers of children born to that generation by the time they reached between the ages of 35 and 40 are slightly higher than the numbers of children born to the immediately older generation.
One reason cited for the halt of the decline in the birthrate among that generation is that it has become possible for more women than before to continue working after giving birth because of measures to support childcare, such as building more nurseries, expanding childcare leave, and improving the working environment, as well as changes in social norms. Women who were already working as regular employees before giving birth benefited more from those changes than other women. According to the analysis of the birthrate trend categorized by level of academic achievement, the birthrate rose mainly among women with a university degree but fell among women with only a high school diploma. The correlation between the birthrate and the potential income that women can earn if they continue working after giving birth has turned from negative to positive in both the United States and Europe, and behind this trend is the change in the social norm of the work-family relationship from an either-or choice to one of reconciliation.
However, although support for childcare has continued to be enhanced and social norms have continued to change for the better for working women with children, the birthrate has once again been declining in recent years. In response, various measures including financial assistance have been introduced, but it cannot necessarily be said that evidence-based proposals for solutions have been made. It will continue to be the responsibility of us researchers to continue reviewing the effects of measures to counter the shrinkage of the child population and to empower women through data-based objective analysis, thereby contributing to policy planning.
April 11, 2025
>> Original text in Japanese
