It is well-known that Japan’s population is both aging and shrinking. This is contributing to a range of economic problems, from declining overall growth to rising fiscal deficits to labor shortages in selected industries. How Japan deals with its demographic challenges will be watched closely by other, notably Korea–which is just a decade or two behind in its own aging process–and China, which is seeking to “get rich before it gets old.”
One potential response to Japan’s shrinking labor force would be to raise female labor force participation, which is quite low by advanced country standards. But a shortage of child and elder care services, exacerbated by limited government resources and regulations on private provision, is posing a serious constraints to such efforts.
A more open immigration policy would help, both by addressing specific labor shortages in child and elder care and by increasing the overall workforce. However, the appetite for increased immigration in Japan is extremely limited.
Instead, Japan is eyeing developments in robotics to help. Robots have been developed to aid older citizens meet their daily needs and, as described in the attached article, similar efforts are underway to develop child care robots:
It is hoped that such technologies could also become an economic driver in Japan. But it raises the question: would Japanese people rather be cared for by robots than foreigners? My very small and extremely unscientific survey of family and friends yields the somewhat surprising result of, well, yes.
Now, if scientists can just develop a way to get robots to pay taxes….