Demographic Trends
and Their Implications for Japan's Future

Naohiro Ogawa, Ph.D.
(Transcript of a speech delivered on March 7, 1997, at the Japan Information Center in San Francisco.)

Naohiro Ogawa: Right now there are three abnormal phenomena going on in Japan. According to the Economic Planning Agency of the Japanese government, they call it the three "two much" phenomena.

The first "too much" phenomenon is that Japanese children study too much. In Japan 1.6 million kids enroll in the Kumon program, and according to government data 48% of primary school kids go to juku. In fact, including my son, he started going to juku when he was in fourth grade. He is in eighth grade right now, but he is one year behind other kids because most of his friends started in the third grade, so he is trying to catch up with them. And this, the juku--this extra session after regular school hours--is most important. Because that is the way they study for the entrance exams. My son knows that he has to keep on doing this until he graduates from high school and until he passes the university exam. So he must attend juku virtually every day for many, many years (and I have to pay a lot of money for him). On the average, a father and his children spend only 37 minutes a day together at home. So the problem is, I think, the children are too busy.

But it is not just the children who are busy. The second "too much" phenomenon is that the Japanese people work too much. According to data, Japanese people work 1,966 hours a year. But Americans work less. And Japanese work much more than the French and Germans. Germans work 1,590 hours a year, so we work about 300 hours more than the German people.

So we're trying to reduce working hours. According to the government plan, by the end of this month, we should achieve the target of 1,800 hours a year, but it doesn't look like we are going to make it.

But anyway, the third "too much" is that Japanese old persons have too much free time. That is a big problem. According to one survey, Japanese elderly persons, particularly 70 and over, spend five-and-a-half hours watching TV every day. Five and a half. The young Japanese in their twenties spend two-and-a-half hours watching TV. So obviously the older generation spends at least twice as much time watching TV.

And we have increasing shares of elderly persons in the population; we have too many elderly persons in Japan, that is the problem.

The first slide shows the changes in the proportion of persons aged 65 and over since the Meiji period. During the Meiji period this proportion was about 5%. It was fairly stable, but when Japan made an advance and invaded China in 1935, that year had the lowest ever share of persons aged 65 and over in Japanese history, 4.7%.

Since then it has been rising continuously. In 1970 we hit the 7% level. According to a 1967 U.S. population publication, the 7% mark is a sort of cut-off for judging whether a society is aged. Japan hit the 7% level in 1970. That year, I went back to Japan to collect my dissertation data, because my dissertation was on population aging, and everybody, virtually everybody, including government officials, thought I was absolutely crazy. Japan wasn't interested in aging at that time. Pollution was the major issue.

But 10 to 15 years later, as this graph shows, the pace of aging accelerated, and people started paying greater attention to aging.

Drop in fertility

The definition of aging is fairly loose. An increase in the elderly population versus a decrease in the younger population. This means a longer life expectancy and reduced fertility.

So maybe we should look at the components of these demographic trends. The first one shows changes in fertility. Between 1947 and 1949 we had a baby boom. This is the most important message that I want to convey to you today. The Japanese baby boom was very short, between 1947 and 1949, three years. After that Japanese fertility went down. Between 1947 and 1949 we had a large number of births, something like 2.7 million a year. And after that it declined dramatically.

After 1949, Japanese fertility went down by 50% in ten years' time, which was the first such experience in the history of mankind. And so, obviously, something dramatic was going on. Up until 1950 the Japanese economy was in a shambles. I mean severely crippled. The famous demographer, Warren Thompson, went to Japan in 1947 and 1948 at the request of President Truman as an advisor for General MacArthur and looked around the country. In a report he submitted to the president, he said that Japan was hopeless. No way it could recover. But Japan might be able to export the following four items by 1970. Can you guess what they were?

Audience: Toys.

Ogawa: Toys, good guess, good guess.

Audience: Textiles.

Ogawa: Textiles, that is right. Three more to go. Okay, bicycles. And rubber shoes and truck lights. He couldn't predict automobiles. Why did he make a mistake? I mean he is a well-known demographer. Why did he make a mistake like that?

The fact is this: he couldn't predict a 50% reduction in fertility in ten years' time. He submitted the report in 1947. In 1950 Japanese per capita income was $153, which was even lower than that of the Philippines. The Philippines' per capita GNP was $172, Mexico's was $181. So Japan was behind Mexico and the Philippines. And U.S. per capita GNP was $1,883, so the U.S. per capita income was about twelve times as high as the Japanese per capita GNP.

So Japan was really in bad shape at the time, but things started getting better. In the beginning, fertility reduction was facilitated through abortion. Three-quarters of pregnancies in the first half of the 1950s ended in abortion. In the second half, 50% of pregnancies were aborted. And in the first half of the 1960s pregnancies were prevented with contraceptives.

So fertility declined, first through abortion and then through contraceptives. And as you know, the pill is still illegal in Japan. Japan is the only industrial nation which hasn't legalized the pill. But it looks like it is going to be legalized by the end of this year.

Because of the decline in fertility, Japan could manage to save a lot, and capital formation was rapidly promoted. By 1960 Japan was ready to grow very rapidly and enter the "Golden 60s." Annual per capita income growth reached 7%. Real growth was 11%, and that lasted for about ten years, which is quite impressive.

Because the baby boomers came into the labor market, we had high quality labor at a low price. Plus, there was the accumulated capital due to the births averted, and the international trade environment was excellent at the time in favor of Japanese products. Plus, we could borrow foreign technology from advanced nations. Due to the combination of these factors, Japan was able to recover quite well.

By the end of the 1960s, Japan's per capita GNP was the second largest in the Free World, which was something totally inconceivable at the beginning of and right after World War II.

But something happened in 1966. Births dropped dramatically. Why? Because it was the year of the fire horse, and according to Japanese superstition, girls born in that year will have very unhappy lives, and most likely will kill their husbands. [Laughter] So that is why parents tried to avoid births. They either had babies the year before that or the year after that.

There are two steps. Fertility dropped after 1950, held steady for a while, and it started going down again after the oil crisis in 1973.

Choosing to stay single

Let's now look at the changing methods of fertility reduction. Around 1970, a large number of births were averted with contraceptives and abortion. But in the recent past, the pattern is different. The proportion of singles has been rising dramatically in the last 15, 20 years. So the source of declining fertility is different.

Japan is quite unique in that sense. Marriage patterns have been changing. It is one of the silent revolutions underway in our country. And the question is, why?

According to the 1995 population census, 50% of women in their late 20s are single. The highest figure is Sweden's, but the U.S. is much lower than the Japanese level. And what is surprising to me is that back in 1985 the proportion of singles for this particular age group was only 30% in Japan. And in 1990, five years later it was 40%. Before 1995 I checked with all my demographer friends in the United States and England and asked them to guess the value for 1995. We had long, long discussions, and our guess was 42%. We never expected it would go as high as 50%.

Audience: Excuse me, but you are using unmarried and single synonymously.

Ogawa: Yes.

Audience: And that, I think, is where your Swedish data are misleading. Because we have many more cohabiting.

Ogawa: Yes, yes. I'll come to that later.

Yes, so in other words, over the last 15 years, every 5 years, the percentage of singles increased by 10 percentage points, which is quite shocking, even for Japanese people. So why is it that Japanese women don't want to get married? That is the question.

First of all, values are changing. According to a survey I was involved in, 75% of Japanese women in their twenties support a concept called "New Singles." This means that "I would like to enjoy the single life without worrying about marriage." And 75% of them support this idea, but in the case of men only 50%. So in other words, even when Japanese men want to get married, Japanese women may not.

This is obviously a big change in values, and the major factor behind this change has been that more women are receiving higher education, living in urban areas, and are in paid employment. As families modernize and grow more urbanized, Japanese women will be better educated and further entrenched in the labor market. And it looks like the proportion of young women supporting this idea will increase in the years to come.

Education is a big factor. Japanese women's educational levels are rising like crazy. In fact, if you combine four-year colleges and junior colleges, the proportion of Japanese women receiving higher education is 48% right now. And in the case of men it is lower, at 42%.

I did some econometric computations on this--computing the rate of return on education. In the case of women--suppose there are two girls. One girl stops with a high school education and starts working right away. The other girl proceeds to a four-year college. This girl will earn a 60% higher annual salary than her friend. So the rate of return is 60%, which is quite startling. But in the case of men it is only 20%, so I tell my male students that they don't have to come to university, I want to have girls because that is more sensible from the economic point of view. [Laughter] But anyway, apart from that, I asked the question, "Why?" A lot of Americans, a lot of foreigners tend to believe that the Japanese woman's status is very low. Which is true, depending on how you look at it. But differences in hourly wages for those below age 30 are shrinking dramatically. Back in 1950 the difference was 1 to 0.7. Now it is 1 to 0.86. It's been steadily narrowing between men and women. Why has this happened?

The reason is that more women are getting hired. The difference in starting pay between men and women is not so great. About the same. But those women who go on to get higher wages don't want to get married. Because they don't want to get married, they accumulate seniority and get even higher wages. Because they get more pay they still don't want to get married.

In other words, because they don't want to get married, they gain seniority, and because of this they get higher wages. This leads, in turn, to substantial economic autonomy, so they have even less compunction to get married.

Co-residence with parents

I did a survey last year on what are the important factors on the part of women in choosing their prospective mates. I did a similar survey back in 1988. In 1988 I didn't include this category, but personality is quite important. Almost 85% of the women surveyed thought that was quite important. The second most important was income. About 78% of the women said that was very important in choosing a marriage partner. And the third most important was occupation. About 75% of them said this was a factor. But what is most shocking was this. Between 1988 and 1996 the percentage of women who said potential co-residence with parents-in-law was a crucially important criteria for choosing their prospective mates rose dramatically. Well that is quite defensible. In Japan, about 75% of my students are either the eldest son or eldest daughter. And according to this analysis, the major determinant of co-residence is birth order. Because of Confucian teaching, if you are the oldest, you have to live with your parents. This has been changing, but it is still a basic, fundamental force that is in operation.

Previously there were lots of second and third sons, so women did not always confront the prospect of living with parents-in-law. But these days nearly all the boys are the oldest. I mean there are no other sons. So, if a woman is also the only daughter or the eldest daughter, they have to look after both sets of parents. So naturally co-residence has become a very important factor in choosing a prospective mate.

The probability of co-residing with parents at the time of marriage is settling. Back in 1965 about 62% of marriages led to co-residence with parents immediately after marriage. But the rate has been falling, falling, falling. Yet even now, more than 30% of newly married couples live with parents.

Another factor which is affecting the marriage market is the proportion of marriages which are arranged. Arranged marriages are falling. Back in 1955 there was a sort of social force that dictated that men and women of certain age had to get married, often through arranged marriages. But this phenomenon has been falling quite rapidly. It used to be that 63% of marriages were arranged, but now it is less than 10%.

So social binding is gone. It is more like a free market. People can choose their prospective mates in the "marriage market."

When to have children

Another major change over the past few decades is the interval between marriage and birth of the first child. According to a 1984 PDR article written by Morgan, Brinks, and Parnell, Japanese people have a very short first birth interval. I think in 1965 about 16 months was the average interval between marriage and first birth. But recently it has been changing. At that time, according to them, Japanese couples wanted to have a kid ri ht away because Japanese women found the source of happiness in children. In other words, a woman's primary source of happiness was the children, rather than the husband, so women wanted to have kids right away. But in America the conjugal relationship is more important. That is why the birth interval in the United States is much longer. On average the interval between marriage and first birth is 24 to 26 months.

But now, the Japanese first birth interval is almost like America's. It has been changing, but this figure is quite tricky. There are more couples who are having children before marriage. In Japan marriage meant procreation. But this doesn't really hold anymore.

The average age of first marriage for Japanese women is 27.7 and that for men is 30.7. They are very high. They are some of the highest in the entire world. But, according to my 1996 analysis, the average age of first sexual contact for girls has been falling dramatically, so the period in which they are sexually active has been getting longer.

Even though the period of sexual activity is longer, I mean without getting married, co-habitation is very low. Compared to Sweden, the co-habitation rate in Japan is one-fortieth of the Swedish case.

Nobody can really explain what is happening. I mean I am having a hard time. I am trying to write a paper on that. Japanese singles lead a unique l festyle. They are sexually active, but they are not cohabiting, and the age of marriage is very high. And Japan is the only country in the world which has a rapidly increasing per capita income and a rising age of first marriage. And they tend to have a sort of reverse relationship. If the income is high, they should get married earlier, but that is not what is happening in Japan. There are so many contradictory phenomena going on in Japan, and I hope that Stanford people will look into this matter as one of their research topics.

And I am a bit worried about Japanese women because arranged marriages are gone; the marriage market is free, but according to my data in Japan 45% of single girls are not dating. I mean this figure has been stable since the beginning of the 1990s. The marriage market hasn't changed at all, and with arranged marriages gone, it looks like there is no way for Japanese girls to get married.

Japan used to have a universal marriage pattern, but this universal marriage concept is rapidly disappearing in my country.

A graying society

Back in 1950 the Japanese life expectancy for males was 56 years old, while in the U.S. it was 66 years old--a ten year difference.

But today, Japanese life expectancy is 76 years old, and the U.S. figure is 73. So over this 40-year period Japan and the U.S. crossed over somewhere. I think in 1960, if I remember correctly. And in the case of women, Japan's life expectancy is of course the highest in the entire world. Life expectancy hasn't been growing because of reduced infant mortality, which is already the lowest in the entire world: One child per thousand births.

The major source of the improvement in life expectancy comes from the prolonged survivorship of older people. Like the population aged 40 plus.

So that is good news for me. I can live a little longer, maybe it is bad news for my wife, but I don't know.


Anyway, because Japan has a low infant mortality rate, the number of births actually determine the shape of the population bell. In another 20 years, those who are 40 years old now will be retiring. They will be 60 years old. And those who were born last year will be 20 years old and they will be entering the labor market. And the way things are moving, we are going to have the severest population aging issues of any country in the next century.

I'll show you something. This is based on my population projection using a chronometric model, which is different from the one the government uses. I released this data to the public a few years ago, and I got a tremendous amount of criticism.

According to this, the population will peak in 2007 and it will start shrinking after that. And then I got called; I went to the Liberal Democratic Party to defend myself. How did I come up with this number, party officials asked, because the government expected the peak to occur in 2012 rather than 2007.

This has tremendous implications in terms of tax revenues. Right now the Japanese government has a huge deficit, and it wants to increase tax revenues, but if the population peaks much earlier than expected, then businesses won't invest so much, and if businesses don't invest, then revenues will decline.

So the government thinks that the psychological effect is enormous, and I was even called to the Diet to defend myself for two hours on how I came up with this number. I think this is ridiculous.

But anyway, last month the government made changes. According to its newest projection, the population will peak in 2007. Exactly the same year as I had projected three years ago. I am not bragging; it's probably a coincidence, but that is what happened.

Sometime this year or early next year, we are going to have more elderly persons than young kids, ages 0 to 14. And in 2007, 20% of Japan's population will be 65 and over, which will be the first such experience in the history of mankind. By that time Japan will have lots of problems.

In Japan, the level of aging varies considerably from region to region. And in one district, 47% of the population is 65 and over. I am now involved in formulating the fifth development plan for Japan. We have projected that by 2025, there will be communities where 87% of the population is 65 and over. Can you imagine 87% of the residents being older persons? There will be no tax revenues there. I mean this is a serious matter.

Today there are around 4,700 administrative offices and branches around the country, and I think most of them are going to have to be closed because depopulated areas will be all over the country. So one of the biggest issues that we on the Council on Natural Land Development face is what we should do with these ghost towns. It is a really big issue right now.

And also, there is the major problem of shifting the capital out of Tokyo to a northern region; I think we have to pick the place by October next year.

And then there is the issue of citizens who are 75 and over. Seventy-five and over is called the "old-old," and they often need nursing attention, medical care, and so on and so forth.

Right now it is not bad, they constitute about 40% of the elderly population. But in the next century, in the year 2018, the share is expected to be 48%. At that point, Japan will have the highest level. In other words, early in the next century, Japan will have a serious problem of caring for aged persons.

But do you know which age group is the one growing at the fastest rate?

Audience: Over 100?

Ogawa: Oh, good. Do you know the rate? My time deposit earns only 1.1% a year, but these centenarians are growing at an annual rate of 13%. Enormous, you know. I mean the fastest-growing segment of the population. When you reach age 100 you can get a silver cup from the prime minister. But if the current trend continues, it is going to be copper, and pretty soon wooden cups maybe. I mean, it is serious.

In fact I was really shocked two years ago to see this lady in a newspaper playing the shamisen. She was a geisha, and she was older than 100. I mean she is 100 years old. I don't know what she does, I mean, I've never heard of a 100-year-old geisha, but that really shows that Japan is an aging, graying society.

Oldest nation in the world

Let me summarize the basic features of Japan's aging population. In the year 2025, the proportion of those 65 and over will be highest in Japan, followed by Italy and Hong Kong, although Hong Kong will be disappearing. Among all the industrial nations, Japan will be the oldest in the entire world.

Although the United States will also be aging, in relative terms, the U.S. will be much younger than Japan. The reason is that the postwar baby boom lasted only two years in Japan, but in the U.S. there was a longer baby boom period, from 1947 to 1964. Seventeen years. Three versus 17 makes a lot of difference in the next century. Why does the E.U. need to be integrated? Because the E.U. countries are all aging. They have to revitalize their economies by uniting their countries.

Japan's 65 and over population is expected to move from 10% to 20% in 22 years time, but Germany and Sweden took 70 years and 65 years, respectively. It took them a long time to move from 10% to 20%, and they are having serious financial problems, particularly Sweden.

I couldn't believe it, you know, the Swedish fertility rate is almost as low as the Japanese fertility rate. Japanese total fertility rate is 1.42, which is the lowest ever in history, I mean for Japan. But Swedish fertility is falling like crazy. I couldn't believe it. Sweden, until two years ago, had one of the highest fertility rates in the entire industrialized world. But it's now close to the U.S. figure because of a depression. Poor economic performance leads to infertility.

The Swedes have pension problems and so forth, but they had 65 to 70 years to make all adjustments. But in the case of Japan, we had only 22 years. We cannot make any mistakes because the pace is so fast.

In the year 2007 Japan will be reaching the 20% level, becoming the first country to do so. Japan has been good at copying from other countries; we call it "adaptation," but people in other countries say "copying." But we can't copy foreign policies any more, since Japan will be first in terms of aging, and we will have to create our own policies.

So Japan's creativity will be tested after 2007. We have only ten years to go, so we have to really get to work to formulate policies which minimize the problems of population aging.

In the year 2025 females will outnumber males because of the difference in life expectancy, and we are going to have a lot of women, older women.

We might call it the feminization of the older population. Many of these women will be widows.

And it is currently my hunch that they will be living alone. Right now 14.7% of the elderly, 65 and older, are living alone in the case of women. But the share is going to go up to 23% in the years to come. In the U.S. it is about 40%, so compared to the U.S. it is nothing, but in the next century it is going to be at least slightly higher than half of the U.S. level, which is still a major revolution as far as Japan is concerned because Japan has had this three-generational co-residence custom. So that is a major change as far as Japanese society is concerned.

Women's growing care burden

And now, my question is, "Who is really going to look after elderly persons?" When this question was posed to married couples, 85% of the husbands said, "Spouse, wife." But do they know that one out of two Japanese wives have thought about divorce. And then I calculated when divorces increase, and I wondered how I can find out if my wife has started thinking about divorce or not?


Anyway, I wrote to a friend in Britain and we came up with something interesting. It is a very complicated diametric analysis, but the result is simple. If a full-time housewife takes on full-time employment, the risk of divorce goes up like crazy and is statistically very strong. If she shifts from being a full-time housewife to doing a part-time position, nothing. Nothing that great.

So I told my friend, "If your wife wants to work then you should ask this way. 'Do you want to work part-time or full-time?' If she says 'part-time.' No problem. But if it is full-time, forget it, you are in danger--in a crisis."


Labor force participation by women aged 40 to 64 isn't that spectacular. But the rise has been phenomenal. And according to some, the rise for this age group is the fastest ever recorded in an industrialized nation.

So the level is not that high, but the pace of the rise is very fast. It is connected with divorce, that is my basic idea.

Divorce does not carry much social stigma anymore. It is sort of a trendy thing. And by the end of my talk you will find out that divorces in Japan will be increasing in the years to come because demand for female labor will be increasing in this aging society.

As I said earlier, the demographic shift is enormous in Japan, and natural caregiving capacity is going down very rapidly in various parts of Japan. Despite this fact, the government started a program called the Golden Plan in 1990, which promotes in-home care.

I did a projection. The Japanese family's support capacity will go down by 50% in 10 years' time, and this is something I can predict with high accuracy. The reason is the numbers going to the numerator and denominator are all already born. They are there already. So what I can say for sure is that the Japanese family's care capacity will go down 50%.

In the year 2005, which is close to the year 2007, Japan's family care capacity will be the lowest in the entire world. The U.S. is pretty high. Again this is connected with the duration of the baby boom. And also the U.S. allows foreign workers to come in. That is another factor.

The Japanese government is trying to promote in-home care through the Golden Plan. Daycare centers and facilities for short term stays are being increased, and more health workers are being enlisted. But the key is having somebody live with elderly persons.

Co-residency is the key. And in the case of Japan, the proportion of the 65-and-older group living in institutions is only 1.6 percent, but in the case of the U.S. it is 5%, Germany is 4%, Sweden 9%. Many Japanese elderly persons living in institutions, moreover, are in the hospital. We call this phenomenon "social hospitalization."

Japan has a universal health insurance system. If I get sick I go to the hospital and I get hospitalized. I don't have to pay much. I pay only 10% of the medical bill and the rest is paid by the government. Because of this, do you know how long Japanese people stay in the hospital once they are hospitalized? An average of 45 days, as opposed to 10 days in the United States. Does this mean the Japanese people are four-and-a-half times as sick as Americans? No. We go to the hospital because we don't have to pay that much. Also, we lack the intermediate nursing institutions; geriatric hospitals are quite a new development, so all these elderly persons wind up in the hospital.

And if we put our parents in a hospital, we don't feel so bad. If we don't take care of them, it is a big social stigma. So in most cases we put ourpa rents in a hospital so we don't feel so bad.

But the government can't really cope with rising medical costs, so it decided, you know, to reduce costs through the implementation of the Golden Plan. But the key is co-residence. Can we really retain a high level of co-residence?

End of Japan's high savings rate

According to the 1978 White Paper on Health and Welfare, Japan had a high percentage of elderly persons who are residing with children compared with other industrial countries like France, the U.K., Finland, the United States, and Sweden. The incidence of co-residence in Japan is falling, b t it is still high. So the government is trying to take advantage of this. That is why it implemented the Golden Plan.

Japan is only one-twenty-fifth the size of the United States, but the total value of Japanese land is four times the total U.S. land value. This means that Japanese land prices are enormous. I mean outrageous.

So we can't afford to buy a house, and thus parents have a strong bargaining position. They say, "We'll give you the house in return for co-residence," which is a strategic motive. The parents provide stock, and the kids provide a service in a stock-flow contract. Because of this arrangement, Japan managed to maintain high rates of savings. It is called the dynasty model, where there is a transfer from one generation to another so that total savings don't go down. But will this pattern endure in the years to come?

The crucial factor is what happens to co-residency. In putting a paper together with Andy Meisen, I've found that the dynasty model definitely works. Depending on how much they receive from parents, kids display very different consumption patterns.

The main determinant of co-residency, as I said earlier, is birth order. If you are the eldest son, you have to live with your parents. Arranged marriages are another factor. Parents used arranged marriages as a mea s of controlling the flow of resources between generations. A criteria for an acceptable bride may be her willingness to live with her aging in-laws. There's a kind of control there. Education is yet another factor. Well-educated parents tend to prefer not to live with the kids. Because more people are receiving higher education, it looks like the incidence of co-residence will be declining in the years to come.

If that is the case, savings in Japan could go down further, and in fact the government has recently published a document encouraging elder people to start thinking about the "reverse mortgage scheme."

One Japanese city has a unique system whereby a resident can make arrangements to transfer ownership of a house to the city, which then becomes responsible for providing care and meals for as long as the resident if alive.

The interesting, or the scary, part of this, though, is that the kids don't always know about it. Parents make a deal with the city, but the kids aren't necessarily informed or consulted about this. All these kids assume that they'll get the land and the house. But when their parents pass away, there's no more land. The city keeps the land. The city keeps the house.

This kind of thing is going on, and in fact the government is officially encouraging elderly people to look into this. If that is the case, Japanese savings might be affected considerably in the years to come.

Changing family organization

Co-residing with the husband's parents, which is called patrilocality, is still dominant. But matrilocality, or co-residing with the wife's parents, is growing two-and-half times more rapidly. And my guess is that if the current trend continues, by the year 2000 co-residence with the wife's parents will be greater.

This would represent a major change in the Japanese family organization. In the past, co-residence invariably meant living with the husband's parents, and so this would be a major change.

The government is trying to use co-residence as a way of overcoming the problem of population aging, but as I have just said, co-residence will probably go down further.

I did a survey quite recently and asked women whether they had ever thought about dissolving the co-residence arrangement. And amazingly, 55% of the respondents said they had. In the case of men it was only 25%. Men don't live together with the parents all day. They are just home at night. But women have to spend the whole day with their mothers-in-law. So the in-law problem is very serious in Japan and, of course, the old lady is the supervisor and the young wife is the subordinate, so naturally they have frictional problems. And I think that this means, if there is a job outside, most likely Japanese women will use it as an excuse to not live with their in-laws.

There is one good thing about living with the wife's parents. The divorce risk is 20% lower than if the co-residency is with the husband's parents. The wife obviously can get along better with her own parents, so I think it is better to live with the wife's parents if couples have to live with parents at all. And then I don't think marriage will be such a big gamble for women.

Living together with parents can mean that the parents will help provide childcare services, allowing women to pursue their careers. But at the same time she might end up having to look after her parents or in-laws when they get sick, develop senile dementia, or become bed-ridden. So it is a gamble. But I can compute the cost of co-residence in this way. Suppose a couple has one kid, one birth. How much will the child cost in terms of hourly wages? If they have one baby, a woman's earning capacity goes down by 10%, but if she has to stay at home and look after elderly parents, she loses 1.2% per month.

You think this 1.2% is nothing, but on the average women spend 10 months looking after elderly persons, I mean, once they get sick. So they lose 12%. So in the case of childbearing, 10%, in the case of caring for a parent, it is 12%. So they are equally damaging for women. A public support system has to be introduced as quickly as possible because there are all these women having to provide care. This usually results in a conflict between a career and caregiving.

The burden of supporting an aging society

Despite these indications of weakening family support the government is trying to shift the responsibility back to families. This is because the total of health insurance contributions, pension contributions, social security contributions, and tax payments--the so-called national burden rate--will be 45% of national income in the years to come. According to my estimation, we will reach the 45% level in the year 2005, which is less than 10 years away. And we will reach 50% in 2014.

My conclusions are quite comparable to the ones obtained by the Ministry of International Trade and Industry and the Economic Planning Agency. They have their own econometric models, and we all came up with the same conclusions

An IMF study says that in 2010, the Japanese pension scheme will go bankrupt. This means we have to revise our social security system quickly.

And besides that, economic growth performance will be affected by the fact that the labor force will begin shrinking in the year 2001. The hours worked will be less and less, and so more women will have to be come i to the labor market. But again this is not really possible.

As I said earlier, women will be expected to perform many more tasks for the family. The number of elderly persons, bed-ridden persons aged 65 and over will go up like crazy. Almost like three times in the next 35 years.

I have calculated the burden of providing care to these frail, elderly persons. I mean the burden for women in various age groups. And the most astonishing figure is the rise in the burden of providing care to the elderly for those aged 40-49. Right now one out of fifteen women in their forties provide care at home. But in the year 2025 the share is going to be 46%. Sixty-four percent of women will have to provide care at home for elderly persons who are suffering from senile dementia or are bedridden.

And the problem is this. Those who will be 40 years old in 2025 are the ones going to elementary school today. Can we really count on them?

The percentage of women of reproductive age who expect their children to care for them in old age is going down. In 1950, about two-thirds of women hoped to depend on their children in old age, but this figure has been going down continuously. It really dropped dramatically right after a system of social security was implemented.

In a survey, women of reproductive age were asked, "What do you think about looking after your elderly parents?" For many years a high percentage said it was a good custom or that it was one's natural duty. Almost 80%. But starting from 1986 it dropped dramatically. And it is still falling.

I had a hard time publishing this paper; the reviewers said, "Why did it start falling?" My guess was this. Around 1985 the government started publishing a lot about population aging. In 1986 the government came up with a document saying, in effect, "Look, don't expect the government to provide you with financial assistance. You take care of yourself." And in 1987 they said, "Don't expect anything from us in terms of manpower. You take care of yourself."

Before then, women thought, "Oh, maybe the government will look after my parents. No problem." So they always said, "Oh, it is a good custom. But I don't have to take care of them myself."

But when reality sunk in, they started showing their real feelings. The percentage is still falling. In 1986 less than half of the women surveyed thought that it was a good custom or a natural duty.

So the Confucian notion of filial piety is deteriorating very quickly. This is going to affect the pattern of providing care in our country.

I have been talking about a lot of negative things about my country, and you might get me wrong and think, "Maybe this guy doesn't have any positive or constructive ideas about population aging." But I do. In the year 2000 the proportion of those 65 and over will be 17%, which is equivalent to the current Swedish level.

So in the year 2000, I will ask everybody to stand in a line from the youngest to the oldest. And I will look at the oldest 17% and call them "elderly persons." I will do the same thing every year. So in other words in order to keep the economic burden of the "elderly population" constant at the 17% level, I can change the definition of an elderly person. So in the year 2025 the elderly will be anyone who is 73.2 years old or over.

So in 2025, if the ranks of the elderly begin at 73.2 years old, then we might be able to manage the problems of population aging.

But I forgot to tell you one thing. I said America has a relatively young population. Japan and the U.S. have serious trade friction problems, but officials pay attention only to short term figures. But I think they should keep population trends in mind when they negotiate all these problems. My feeling is that the dollar, which is now 122 yen, could go as high as 200 in the years to come.

(The above article is offered for reference purposes and does not necessarily represent the policy or views of the Japanese Government)

Naohiro Ogawa

Born in 1944. Received his Ph.D. in economics from the University of Hawaii. Has been Population Officer at the U.N. Economic and Social Council for Asia and the Pacific. Is now professor of economics at Nihon University. Author ofThe Family, the Market, and the State in Ageing Societies (with John F. Ermisch), Fertility Change in Contemporary Japan (with Robert W. Hodge) and other books in English and Japanese.

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