The world is in a state of overpopulation, which is acknowledged as a global challenge. However, population decline is a problem unique to advanced countries, and Japan is no exception as its population is projected to decrease to about 40 million by the early 22nd century. In the January issue of the RIETI Report, we present the BBL seminar "Demography and the Japan Economy" featuring Senior Advisor and Faculty Fellow Hiroshi Yoshikawa.
Yoshikawa addresses several main points in this seminar, and reviews the demographic situation in Japan where the population decline is the biggest problem facing its economy and society. The social security and public finance situation can be seen in the growing disparities driven by the aging population and disparities within the working population as exemplified by income inequality between those in permanent full-time positions and those in precarious employment. Furthermore, Japan's social security expenditures are rising with the aging of the population to a level far exceeding the amount of revenue received in premiums, and 40% of the expenditures are now covered by public funds.
Yoshikawa continues with a look at the problem facing Japan's rural areas which are experiencing depopulation as agglomeration in large cities continues. However, he stresses that the dispersion or agglomeration of the population should be determined by the combination of the advantage of labor agglomeration and the comfort of people's lives, and not by the government forcibly shifting the flow of people. As Japan's population is declining, the popular argument is that zero growth is the best that the Japanese economy can achieve, but Yoshikawa refutes this as he states that the economic growth of advanced economies is determined by the growth of per capita income, which is determined by innovation, and furthermore, innovation drives labor productivity. Yoshikawa adds that companies have a critical role to play and should be making more efforts as they are the ones counted on to serve as the driving force of the Japanese economy. The seminar concludes with a Q&A session on various issues.