Immigration and Japan’s Declining Economy

Japanese worker

I saw that this post on IZA World of Labor about the Japanese economy. It has again slipped into recession. Why? An aging workforce, and very low immigration.

Japan just doesn’t have enough workers to fill available jobs. The unemployment rate is at a long-term low of 3.4 percent. For every job seeker, there are 1.24 job openings. Japan’s worker shortage, according to the Wall Street Journal, will cost the country $86 billion in 2015 and 2016, or 2 percent of the country’s GDP.

Japan’s aversion to immigration has been a slowly developing disaster. Japan ranks 3rd in the world in median age of its population: 46.1 years. Immigrants could bring down the median age of the workforce and help alleviate the worker shortage. However, today foreign-born workers constitute just 1 percent of the Japanese workforce.

Here in the U.S., immigrants make up 16.5 percent of the workforce. Undocumented immigrants here make up a far greater percentage of our workforce than all foreign labor in Japan: 5.1 percent. The median age in the U.S. is 37.6.

Still, our policies aren’t keeping up with the times. Congress last adjusted our immigration levels a quarter century ago, in 1990. Since that time, the GDP of our economy has doubled. And it looks like Congress will not act any time soon to modernize our immigration system.

Photo credit: Stephen Geyer via Flickr and the Creative Commons license.