Demographic challenges and economic stagnation in Japan

Abstract The paper critically reassesses four common claims in policy discourse: demographic determinism, excessive concentration in Tokyo, disproportionate migration of women, and student-driven urban inflows. We find that each rests, at least in part, on a misinterpretation of the data. Using a simple growth accounting framework, the paper shows that population decline and aging account for only a small portion of Japan’s growth slowdown. Instead, weak productivity growth plays a more central role. The paper points out the importance of distinguishing between net migration and gross migration. Apparent overconcentration of population in Tokyo reflects declining gross mobility rather than increased one-way migration. The paper also reports preliminary evidence that population mobility is positively associated with economic growth. The results suggest that Japan’s demographic challenge may be better understood as primarily institutional, highlighting the importance of policies that facilitate mobility rather than restrict demographic adjustment.