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The Need for a Radical Review of Measures to Counter Birthrate Decline
and for the Creation of a Powerful Policy Package

December 9, 2009

Overview

Japan's fertility rate has become the lowest among the developed nations, and the decline no signs of slowing. In the United States, by contrast, the total fertility rate has been rising steadily since 1998 and in 2004 reached 2.05, almost on a par with the "replacement level" of 2.07 (the level at which the population remains constant). In France, the total fertility rate has been rising steadily since 1994 and in 2005 reached 1.94.

A breakdown of statistics for the United States reveals that the rise in the total fertility rate is largely due to a rise in the fertility rate among Hispanics. A further breakdown of birth rates by mother's age reveals that among non-Hispanic whites, the fertility rates by age group are similar to those seen in Japan, whereas among Hispanics and non-Hispanic blacks, the peak in the fertility rate comes among women aged 20 to 24. One factor behind the high fertility rate among women in their early 20s is the large number of illegitimate births.

In France, the rise in the fertility rate in recent years is largely due to births among women aged 30 or above. Generous family allowances and an extensive child raising support system have played a part in this phenomenon. However, the fertility rates among women aged 30 to 34 and women aged 25 to 29 are high as compared to the rates in Japan, and the fertility rate among women aged 20-24 is far higher than in Japan. This is partly due to social change: de facto marriages not governed by law are now commonplace and illegitimate children account for almost half of all births.

In recent years, the prevalent view has been that the increasing number of women working outside the home is the reason that fertility rates in the developed nations have bottomed out or begun to rise. However, in countries where per capita GDP is in excess of $30,000, at least in 2003, the correlation between the proportion of women working outside the home, and the total fertility rate was weak. If anything, the fact that in most countries, the fertility rate peaks among women in their 20s and that, in countries with a high fertility rate, the contribution of women in their early 20s is a significant one, suggests that the correlation between the proportion of illegitimate births and the total fertility rate is stronger.

Turning back to Japan, a breakdown of statistics by mother's age reveals that the decline in the total fertility rate is largely due to a decline in the fertility rate among women aged 20 to 24 and 25 to 29. The proportion of illegitimate births in Japan is extremely low by international standards, so that, if the total number of births (including illegitimate births) for each age group is divided by the number of married women in each age group, it is possible to estimate the approximate number of births per married woman for each age group. The calculation reveals that, in Japan, the fertility rate among married women across all age groups is generally stable in the long term, and that the declining birthrate is due to women remaining single or marrying later in life.

Whether or not illegitimate births are considered a problem depends largely on the social conventions in each country and the issue should be debated with caution. However, with the exception of the United States, which is a multi-ethnic nation, there are fundamental differences between Japan and Western countries in terms of whether childbirth and child raising are seen as a matter for the individual or one that requires the support of society as a whole. The difference in the numbers of illegitimate births is symbolic. At the deepest level, there are differences in thinking on the roles of society and of the government. Western countries, and particularly northern European countries, see the increasing fluidity of employment and of society, and the growth and increasing sophistication of female employment in conjunction with industrialization and globalization as natural developments, and have revised their thinking on the roles of society and of government in forming the next generation. By contrast, in Japan, where employment has become increasingly fluid and more women are working outside the home in recent years, the gap has widened.

In this light, the key to achieving an increased fertility rate in Japan lies in the following three strategies:

(i) Step up measures to help people get back into work

From the mid-1990, as the trend towards globalization gathered momentum, the developed nations of Europe began to introduce active employment measures, centering on measures to help people get back into work. In Japan, by contrast employment measures center on unemployment benefit and other passive measures. In terms of its ratio to GDP, Japan's spending on employment measures is one of the lowest among the major OECD countries. Against this background, the severity of the income gap problem is increasing.

(ii) Reduce the burden of child raising and education

Following on from measures to help people get back into work, the next step towards achieving an increase in the number of marriages is to boost the fertility rate among married women. In Japan, the number of children that women would like to have is greater than the number of children they are planning to give birth to, and the greatest obstacle to having as many children as they would like is the cost of child raising and education. From this perspective, Japan's government spending on education-related areas as a ratio of GDP is one of the lowest among the developed nations of the OECD.

(iii) Bring domestic costs down to an appropriate level

Apart from increasing government spending, one way to reduce the cost burdens of child raising and education would be to increase the real purchasing power of households by bringing domestic prices down. If the gap between overseas and domestic prices is examined in this light, the conclusion must be that Japan's high cost structure has yet to be corrected. The delay has been particularly severe in the government sector, typified by public works. If domestic costs are to be brought down to an appropriate level, it is urgent that Japan should pursue administrative reform, making use of private finance initiatives and the marketability tests whose introduction is expected in the future.

* Copies of this document are available from the Economic and Industrial Press Club.

For more information on the content of this report, please contact: Hideki Hidehiko Fujii the Japan Research Institute, Limited.

Tel: 03-3288-4615
E-mail:fujii.hidehiko@jri.co.jp

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