Labor Market Regulation in Conditions of Aging and Shrinking Workforce in Japan in the 21st Century

Japan’s low fertility rate along with one of the highest life expectancies worldwide has derived into a demographic crisis. The country’s population continues decreasing year after year and although this phenomenon is not exclusive to Japan, it is unique the unprecedented speed at which the population is ageing and shrinking. This has significant implications for Japan’s economy and society: from severe labour shortages and greater burden on the health system, to not enough young people to care for the elderly and support the pensions' scheme. Thus, proper design and successful policy implementation today will determine the well-being and survival of the country's future generations. Our research focuses on pro-natalist and immigration policies. The demographic patterns of Japan as well as the success of the government’ measures to turnaround the drop on the fertility rate and acute labour shortages, are conditioned by the country's approach to national identity, gender roles, culture and tradition, which have been highly disregarded in the literature. At this crossroads, policies should also be aimed at producing a shift in the Japanese mentality regarding the factors aforementioned so that population ageing and labour shortages can be reversed.