How the population density influences the economic state of Japan

Fuga Nomura

The population of a country plays a crucial role in the economy as the quantity and the distribution of the economy can help or hinder the rate of economic development and dynamics The decline in Japan's birth rate is attributed to the economic insecurity felt by the younger generation, which indicates that the decrease in the birth rate is not due to a tendency among people to have fewer children, but rather due to an economic environment that is not conducive to encouraging childbirth. Due to the shrinking population of Japan, the economic state of the country is substantially influenced

The shrinking population of Japan has had substantial influence on the country’s labour shortage and the consumer market putting upward pressure on wages within the country. A Lot of young workers from Japan are moving overseas to get better pay and working conditions. According to the Organization for Economic Cooperation and Development, the average wage in Japan in 2021 was $39,711, barely increasing over the 30 years Meanwhile, wages in the U S are about 1.9 times higher than in Japan and have increased about 1.5 times over the same period.( Nikkei Asia, Accessed 17 Mar. 2023)These results show that the pressure of wages has greatly impacted the young workers from japan

Due to the lack of young workers in Japan, the retirement age has been extended to 65 years old. (Chau, Charles. HRM Asia, 6 Apr. 2021)which may have many negative aspects of potential job performance deficits in working memory, processing speed, and information processing compared to younger workers Therefore it may become difficult to provide locally produced goods and services that are successful enough so that the country can gain economic stability through the consumers investing and purchasing the products that the business makes.

Japan, realizing the consequences of the state of the economy due to the demographic structure, has made an approach towards increasing the number of women in the labor force. The Japanese public have been increasingly supportive of women's labor market engagement to work. Women's labor participation and the quality of woman labor is an important factor for the opportunities for woman empowerment and economic growth. Figure 2 shows the comparison of Japan, United states and OECD countries. Over time, it can be seen that Japan has the highest rate of women's labor force participation among the three countries, demonstrating the effectiveness of Japan's public policies to support women's labor in increasing the country's labor force and improving its economic state.

Overall it can be seen that the economic state of Japan is being greatly affected by the demographic structure of the country The labor shortage is dropping, putting pressure on wages and the lack of young workers has caused the extension of the retirement age to 65 affecting the elderly population as well. As an approach towards increasing the labor force Japan made a public policy that supports the woman labor which has been efficacious to ameliorate the economic state of Japan However, given the continuing decline in population, simply increasing women's labor force participation will not be sufficient Japan will need to find more solutions so that the economic state could be more stabilized.

Bibliography:

Chau, Charles. “Japan Approves Law Raising Retirement Age to 70.” HRM Asia, 6 Apr. 2021, hrmasia.com/japanapproves-law-raising-retirement-age-to-70/.“Japanese Workers Become Migrants Seeking Better Pay Overseas ”

Nikkei Asia, asia nikkei com/Business/Businesstrends/Japanese-workers-become-migrants-seekingbetter-pay-overseas. Accessed 17 Mar. 2023.