Immigration as a Means of Reducing Demographic Constraints to Economic Growth in Japan

Since the beginning of the economic crisis in Japan in the 1990s, Japan is facing various economic and demographic problems, such as low levels of economic growth, shrinking of the youth and rapidly aging population, which is damaging to the economic development of Japan. One of the main solutions for this problem is opening the country for more immigration. However, this topic arouses a lot of controversy in Japanese society since the effects of bringing more foreign workers were not clarified. Hence, it is of crucial importance to understand how different levels of immigration can affect Japan in the short and long term. In this research, we plan to concentrate on the economic side of this problem. This research aims to describe the history of modern labor immigration in Japan, analyze the effect it had on major macroeconomic indicators of the Japanese economy, clarify the influence of rising levels on immigration in the future, and compare immigration policies in other developed countries (Germany and South Korea) in order to create recommendations for the Japanese immigration policy. We will apply the method of analysis and synthesis of economic information, comparing analysis, theoretic modeling, method of linear regression analysis to determent the relationship between rising immigration and the fluctuations of macroeconomic indicators of the Japanese economy, and exploring cases of other countries. As a result, we proved the low levels of immigration at the moment, determined positive (decreasing labor shortages and absence of influence on the native’s income) and negative (increasing competition at the market for low-skill labor) aspects of immigration, and created recommendations, such as to increase the social protection and the employment of immigrants. Keywords: Japanese economy, labor immigration, foreign labor