Shrinking population and its consequences in Japan: social security, regional disparity, and ethnic diversity

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1 Shrinking population and its consequences in Japan: social security, regional disparity, and ethnic diversity SEMINAR ON POPULATION PROJECTIONS AND DEMOGRAPHIC TRENDS 2018 November 13, 2018 Yu Korekawa National Institute of Population and Social Security Research, Tokyo, Japan

2 Contents 1. Objective 2. Overview of the Official Population Projection of Japan Summary of Results Assumptions (Fertility, Mortality, and Migration) 3. Consequences of Shrinking Population Stagnated Economy? Regional Disparity Ethnic Diversity 4. Discussion 2

3 1.Objective Question: Japan is now under population decline, but how will it be? How fast, and how large will it be? As a result, what will happen? To reveal them, we should see 1. inside of the official population projection of Japan in 2017, 2. results of the projection 3. and, possible consequences of shrinking population. 3

4 2. Overview of the Official Population Projection of Japan Framework Released Date: April, 2017 Projection Period: (50 years) Coverage: Total Population (Japanese and foreign citizen) Sub-population: Sex, Age (0-104 and +105 years old), Japanese and Foreign Citizen Base Population: Total Population as of Oct. 1 st, 2015 (Population Census of Japan) Cycle: Every 5 years (a year later the population census) Method: Cohort-Component Method 4

5 Fertility Assumptions Type of assumption Medium-variant assumption High-variant assumption Low-variant assumption Fertility assumption index Current statistic value, women born in 1964 Assumption Assumption, women born in 2000 (reference cohort) (1) Mean age at first marriage 26.3 years old 28.6 years old (2) Proportion of never married 12.0% 18.8% (3) Completed number of births from married couples (4) Coefficient of divorce, bereavement, and remarriage 1.96 children 1.79 children (1) Mean age at first marriage 28.2 years old Statistics in 2015 Total fertility rate Projection in 2012 Progression Maximum value Minimum value 1.42 Maximum value (2) Proportion of never married 13.2% Same as above (3) Completed number of births from married couples (4) Coefficient of divorce, bereavement, and remarriage Minimum value 1.45 Maximum value (2) Proportion of never married 24.7% Same as above (3) Completed number of births from married couples 1.91 children (1) Mean age at first marriage 29.0 years old (4) Coefficient of divorce, bereavement, and remarriage Table 1: Summary of Fertility Assumptions 1.68 children Minimum value Sex ratio at birth: The average value of the sex ratio at birth (105.2) from 2011 to 2015 is assumed to remain constant onward 注 ) 標本調査を含む実績値と人口動態統計にもとづく実績値との乖離を調整する係数を乗じた調整済み離死別再婚効果は以下の通りである 1964 年コーホート : 年コーホート : Total fertility rate Actual Year Note: Previous projections are shown in broken lines Projected 5 High- variant Medium- variant Low- variant Figure 1: Trends of the total fertility rate: Medium-, high-, and low-variant projections

6 Mortality Assumptions Female Medium- variant Medium- variant High- variant Low- variant High- variant Table 2: Trends of life expectancy: Medium-, high-, and low-variant projections life expectancy (years) Male Low- variant Note: Previous projections are shown in broken lines Low M80.75,F86.98 M86.05,F92.48 Medium M80.75,F86.98 M84.95,F91.35 High M80.75,F86.98 M83.83,F Actual Projected Year Figure 2:Trends of life expectancy: Medium-, high-, and low-variant projections 6

7 Migration Assumption Immigration rate Male Female Number of net migrants (thousands) Proportion of men among net migrants of non-japanese origin:48.9% Projected 69, Age Year Figure 3-1: Age-specific net international migration rates by sex for Japanese Figure 3-2: Number of net migrants of non-japanese origin (both sexes) 7

8 Summary of Results Total Population Table 3: Summary of the Population Projection for Japan 2017 Medium Fertility Variant [1.44] High Fertility Variant [1.65] Medium Mortality Variant [Male years old] [Female years old] m m m m m m m m m Low Fertility Variant [1.25] Old Age Population m, 26.6% 33.87m, 26.6% 33.87m, 26.6% m, 35.3% 39.21m, 34.5% 39.21m, 36.2% m, 38.4% 33.81m, 35.6% 33.81m, 41.2% Source: Population Projection for Japan

9 Summary of Results (Cont d) (Thousands) 140,000 (%) , ,000 (Fertility assumption) High-variant Note: Previous projections are shown in broken lines (Fertility assumption) Low-variant Medium-variant High-variant 80,000 Medium-variant Low-variant 30 60,000 Note: Previous projections are shown in broken lines , ,000 Actual Projected 10 5 Actual Projected Year Figure 4-1: Actual and projected population of Japan: Medium-, high-, and low-fertility (medium-mortality) projections Year Figure 4-2: Trends in the proportion of elderly (aged 65 and over): Medium-, high-, and low-fertility (medium-mortality) projections 9

10 Summary of Results (Cont d) (1) 2015 (3) 2065 Males 男性 100 Females 女性 Males 男性 100 Females 女性 Old-age population (aged 65 and over) Working-age population (15-64) Young-age population (aged under 15) (ten 人口 thousand) ( 万人 ) High fertility variant projection Medium fertility variant projection Low fertility variant projection 人口 (ten( thousand) 万人 ) Figure 5: Population pyramid: Three fertility variant projections (Medium Mortality) 10

11 2. Consequences of Shrinking Population - Stagnated Economy? Low, 81.5 Medium, 74.6 High, Replacement Ratio of the Standard Pension (Medium Assumptions) 2014: 62.7%, 2019: 60.3%, 2030: 57.2%, 2044:50.9%, 2050: 50.9% Mid-term Economic Outlook (GDP, Real) 2018: 1.5% 2027: % Government Fiscal Deficit (Stock, % to GDP) 2018: 189.2% 2027: 157.1% % Figure 6: Projection of Old-age Dependency Ratio (Elderly People per 100 Working-Age People) Source : MHLW 2015, Cabinet Office2018a,b 11

12 3. Consequences of Shrinking Population - Regional Disparity km Figure 7: Population Size in 2045, Compared to the 2015 Size(2015=100), Prefectures Source: Koike

13 3. Consequences of Shrinking Population - Ethnic Diversity Third Demographic Transition (Coleman 2006) a third demographic transition is underway in Europe and the United States. The ancestry of some national populations is being radically and permanently altered by high levels of immigration of persons from remote geographic origins or with distinctive ethnic and racial ancestry, in combination with persistent sub-replacement fertility and accelerated levels of emigration of the domestic population. Ethnic Diversity from the Bottom (Lichter 2013) Diversity begins with children from the bottom up. Over the next generation or two, an older, largely white and affluent population will be increasingly replaced by today s disproportionately poor minority children, who will reshape America s future and its place in a globalizing economy. Japan has experienced a migration transition in the 1990s, and it will also face a big change of ethnic diversity.(korekawa 2018) 2.6% of the total population is those with migrantbackground in % of the total population (more than 10 millions) will be those with migrant-background in Proportion to the Total Population(%) Age 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% All Age Groups (Male) Foreign Citizens Naturalized Immigrants International Children 2035 (Female) (100) (50) Population Thousand 2040 Year Figure 8: Projected Proportion of Population with Immigrant Background Source: Korekawa 2018 Figure 9: Projected Proportion of Population with Immigrant Background 2065 Source: 13 Korekawa

14 Overview of the History, a Long-term View (Thousand) 3,000 2, , 2,670 Japanese Expatriates Foreign Citizens (Colonial Origin) Foreign Citizens (Not Colonial Origin) 2,232 2,000 1,500 1,000 Annexation of Korea (1910) Reform Act of Immigration and Refugee Immigration Control Control Act Order (82) (51) Reform Act of ICRRA 1940, 1,304 (90) Liberalization of Traveling Overseas (64) 1,352 The End of W.W.2 (45) Source: Various Materials Figure 11: Trends of International Migration of Japan 14

15 A Recent Trend: Chinese Led the transition, and more diversity has come about 900, ,000 Registered Foreign citizens 700, , , , , , ,000 South/North Korea Old-Comer Korean New-Comer Korean China Philippines Other Asia Brazil Source: The Registration Data on Foreign Citizens Figure 12: The Trends of International Migration of Japan, by Nationality 15

16 A Recent Trend: From Family-based to Economic Immigrants 400, , ,000 Family(Accompanying Family) Family(A Spouse of JP) Japanese Descendents 400, , ,000 Student Work(Entertainer/Cook) Industrial Trainee Intre-compnay Transferee High Skilled Registered Foreigner 250, , ,000 Registered Foreigner 250, , , , ,000 50, , Note: Japanese descendants consist of Brazilian and Peruvian nationals who have either of a spouse of a Japanese national, resident or permanent resident visa. A spouse of Japanese national excludes Japanese descendants. Source: The Registration Data on Foreign Citizens Figure 13: The Trends of International Migration of Japan, by VISA status 16

17 A Recent Trend: From Family-based to Economic Immigrants Unit Thusand Industrial Trainee Japanese Descendants Work (Other) Spouse of JP Accompanying Family Student High Skilled Note: Japanese descendants consist of Brazilian and Peruvian nationals who have either of a spouse of a Japanese national, resident or permanent resident visa. A spouse of Japanese national excludes Japanese descendants. Source: The Registration Data on Foreign Citizens Figure 14: Contribution to Annual Net Increase of Immigrants, by VISA status 17

18 Major Policy Developments 1952 The enforcement of the Immigration Control Ordinance 1982 The 1 st reform of the Immigration Control and Refugee Recognition Act (ICRRA) The creation of a visa category for industrial trainee 1989 The 2 nd reform of ICRRA (enforced in 1990) - new creations of working VISAs, a new pathway to permanent VISA - the beginning of the Post 1990 immigrants era 1993 The establishment of Technical Intern Training Program (TITP) 2012 The enforcement of the Point-based System for Highly Skilled Foreign Professionals 2016 The 3 rd reform of ICRRA (the creation of a new visa category for a care worker) 2017 Beginning of Working of Foreign Maids in Tokyo, Hyogo, Osaka, Kanagawa prefecture Shortening a residence criterion for Permanent Visa from 5 to 1 year 2018 Amendments of ICRRA is now being under discussed at the national Diet session, which will start to accept low- to middle-skilled foreign labor from the NEXT April. 18

19 A Migration Transition; a Japanese case Japan experienced the migration transition in 1997, in terms of the balance between the number of immigrants and that of Japanese expatriates. Behind the transition, there has been a perpetual high demand for labor force, especially unskilled labors. The 1990 reform of ICRRA led the transition, but the reform was not necessarily proactive but rather reactive to the situation at that time. At the beginning, the transition was led by the family-based migrants, such as Japanese descendants from south American countries, or marriage migrants from Asian countries. Since the late 2000s, economic migrants such as international students, highly skilled professionals, and technical intern trainees are leading the transition, as the number of the family-based migrants are declining. The diversity of migrants country of origin is growing after

20 A Future Prospect Hypothesis: Japanese society will experience a huge social and demographic change by the migration transition now and in the near future. Questions: 1. How large is the immigrant population in Japan now, including children from international marriages, and naturalized immigrants. 2. How will the immigrant population be in the mid- to long-term? 3. How will the social and demographic change be, compared to other developed countries? 20

21 Data: A Methodology and Data Base Population: the Population Census of Japan in 2015 (Japanese Statistical Bureau 2016) 127,095 thousands (the total population) Fertility: the population projection of Japan, 2017 (IPSS 2017) TFR 1.45 (2015) 1.44 (2065) (for Japanese citizens) TFR 1.10 (2015) 1.19 (2065) (for population with migrant background) Mortality: the population projection of Japan, 2017 (ibid) years (male, 2015) years (male, 2065) (for both non-native, and Japanese) years (female, 2015) years (female, 2065) (for population with migrant background) International Migration for Japanese: the population projection of Japan, 2017 (ibid) International Migration for Foreign Citizens: New Assumptions for the present study Methodology: A cohort-component method for the future population, which is same as the methodology of the population projection of Japan, 2017 An estimation of the current non-native population from the past number of international children and that of naturalizations, which are also adjusted with fertility and mortality (no migration). 21

22 Definitions of Terms Definitions of population with migrant-backgrounds: 1. Foreign Citizen: a person who have a citizenship other than Japanese except industrial trainees 2,015,495 foreign citizens (as of 2015) 2. International Child: a child who have at least one immigrant parent 28,787 births/year (the average since 1987) 3. Naturalized person: a person who is naturalized to Japan 13,097 naturalizations/year (the average since

23 Assumptions on International Migration Net Migration of Foreign Citizens 150, ,000 50, , , Year Source: Estimated by author Figure 15: Fitting of Logistics Curve to Net Migration of Foreign Citizens The assumption on international migration of foreign citizens is obtained by fitting logistics curve to the past net migration of foreign citizens, and extrapolating it to the future until The level of net migration rises from 89,797in 2016 to 98,733 in After 2036, the migration rate to the total population by each age and sex group is fixed and kept constant to until

24 A Size of Population, 2015 Age (Male) (Female) Foreign Citizens Naturalized Immigrants International Children (100) (50) Population Thousand Source: Estimated by author Figure 16: The Estimation of the Non-native Population, 2015 Total Population, 2015 Foreign Citizen 2,015,495 Naturalized Immigrants 462,737 International Children 847,173 Non-native Total 3,325,405 (2.6% of the total population) Reference Foreign Citizens by the population census of Japan 1,775,446 (1.4% of the total population) 24

25 A Future Prospect, 2040 Age 120 (Male) (Female) 110 Foreign Citizens 100 Naturalized Immigrants 90 International Children (100) (50) Population Thousand Source: Estimated by author Figure 17: The Estimation of the Non-native Population, 2040 Total Non-Native Population, 2040 Foreign Citizen 4,228,975 Naturalized Immigrants 1,000,265 International Children 2,031,492 Non-native Total 7,260,732 (6.5% of the total population) Total Population of Japan, ,938,432 (the present study) 110,919,000 (the official projection) Difference = 1,019,432 (+0.92%) 25

26 A Future Prospect, 2065 Age (Male) (Female) Foreign Citizens Naturalized Immigrants International Children (100) (50) Population Thousand Source: Estimated by author Figure 18: The Estimation of the Non-native Population, 2065 Total Population, 2065 Foreign Citizen 5,623,167 Naturalized Immigrants 1,648,095 International Children 3,485,462 Non-native Total 10,756,724 (12.0% of the total population) Total Population of Japan, ,898,589 (the present study) 88,077,000 (the official projection) Difference = 1,821,589 (+2.07%) 26

27 A Future Prospect, Diversity from the Bottom Proportion to the Total Population(%) 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % 5.7% 4.8% 3.8% International Children Naturalized Immigrants Foreign Citizens 1.9% 0.7% 0.4% 2.6% Total Age Group Proportion to the Total Population(%) 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 10.3% 9.5% 7.6% 9.1% Foreign Citizens Naturalized Immigrants International Children 2.9% 1.8% 0.8% Total Age Group Figure 19: The Estimation of the proportion of non-native population to the total population of Japan % Source: Estimated by author

28 A Future Prospect: International Comparison Table 4: Projected Proportions of Population with Migrant-background US 22.5% 56.4% UK 16.6% 39.5% Germany 17.8% 45.1% France 15.8% 21.8% Italy 12.7% 40.1% Japan 2.6% 12.0% Note: Figures for UK, Germany, France, and Italy cover foreign citizens, undocumented, and the second and later generations of immigrant-origin. Figures for European countries are those in 2011, and 2061 respectively. Figures for US are for population of other than non-hispanic White in 2014, and 2060 respectively. Source: Lanzieri (2011), Colby, Sandra L. and Jennifer M. Ortman, 2014 and estimated by author 28

29 4.Discussion 1. Japan is now under population decline, due to low fertility and longer longevity, which will not change in the mid- to long-term. 2. Expected consequences will be economic stagnation, due to high financial burden for social security, and negative economic prospect as a result of it. 3. Regional disparity of population decline will be the third pillar of the population decline. 4. More ethnic diversity will be a hidden issue in near future. Low-fertility among native Japanese women, and constant inflow of immigrants will change the ethnic composition gradually. 5. How should we cope with population decline? One possible answer would be a migration policy. Recently, the Japanese government has took several policies to open its labor market to foreign workers, and high-skilled professionals. The net inflow of foreign citizens was 179,000 in 2017, which is a record high in the past decades. Additionally, a new policy to enhance foreign labors is under discussion. 29

30 References Cabinet Office, 2018a, Economic and Fiscal Projections for Medium to Long Term Analysis(July. 9, 2018), Cabinet Office, 2018b, Quarterly Estimates of GDP, sokuhou_top.html Coleman, D., 2006, Immigration and Ethnic Change in Low-Fertility Countries: A Third Demographic Transition, Population and Development Review 32(3), pp IPSS 2017 Population Projection for Japan 2017, National Institute of Population and Social Security Research Koike, S Regional Population Projections and Local Depopulation in Japan, International Comparison of Depopulation 2018 First Biannual Meeting, Population Association of Korea. Korekawa Y Migration Transition in Japan and Its Mid- to Long-term Consequences: Beyond the Japanese Exceptionalism, Immigration Policy Review, Vol.10, pp Lichter, D., 2013, Integration or Fragmentation? Racial Diversity and the American Future, Demography, Vol. 50, pp Ministry of Health, Labour and Welfare, 2015, Summaries of the 2014 Actuarial Valuation and Reform Options, _Actuarial_Valuatin_3.pdf 30

Summary of the Results

Summary of the Results CHAPTER I: SIZE AND GEOGRAPHICAL DISTRIBUTION OF THE POPULATION 1. Trends in the Population of Japan The population of Japan is 127.77 million. It increased by 0.7% over the five-year