<p>This argument does not really work.</p>
<p>1.A Automation actually does not necessarily shrink demand for labor. Often automation actually increases demand for labor. Hence the premise of the argument 1 is simply wrong.</p>
<p>There are two effects of automation, automation is complementary to some labor and automation is substitute for some labor. Historically, and also presently, robots and other automation technologies were in net more of a complements rather than substitutes for labor (see <a href="https://www.aeaweb.org/articles?id=10.1257%2Fjep.29.3.3&amp;source=post_page" rel="nofollow noreferrer">Autor 2015</a>). Even more autonomous robots could be complements depending on the degree of autonomy (e.g. if worker has to explain it tasks to be performed instead of robot figuring it out on its own).</p>
<p>Of course, nobody can predict future, its possible that in future automation will have more of an substitutive effect than complementary effect, who knows, but that is at a best speculation. So far we have 200 years of history showing automation generating more demand for new jobs than destroying it. If you believe this pattern will not only stop working, but go into complete reversal, in next 50 years (over which Japan's population is projected to shrink by almost 50% according to <a href="https://www.statista.com/statistics/607936/japan-forecast-population-age-group/" rel="nofollow noreferrer">Statista</a>, and due to aging working population will shrink even faster), you need to support this with some solid evidence.</p>
<p>1.B Higher population allows actually for more specialization and for more high skill jobs. There is a reason why you won't find highly specialized professions such as neurosurgeons having clinics in sparsely populated villages, but only in large cities. Paradoxically, population decline, ceteris paribus, would be expected to reduce demand for highly skilled and specialized workforce.</p>
<p>I use ceteris paribus, because  a population decline does not just mean people randomly die from every part of population pyramid, so there might be some industries where the change of age composition creates more demand (e.g. geriatric specialized care), but conversely there are areas where the decline in demand for high skill workers will be even further accelerated.</p>
<p>1.C Large population actually promotes technological development. Basic technology has large positive spillover, since you just need to invent it once and then everyone can copy it, and even more specialized technology has patents which eventually expire.</p>
<p>As the literature on endogenous growth shows (see Romer Advanced Macroeconomics ch3) Technological progress does not really depend on how many scientists we have per capita but how many scientist we have in total. A small population of 100 people that is composed of 50% of scientists (meaning 50 people do some science) will progress more slowly than large population of 10000 people where only 1% does science (meaning that large population has 100 scientists). This is again because of nature of technological progress, you just have to invent new idea once, you don't need to reinvent the wheel every time from scratch (no pun intended).</p>
<p>Hence as population declines it is less likely you will see some rapid technological progress. You might see stagnation, or even decline due to point 1.B (there might be academic areas that simply die out due to lack of demand).</p>
<ol start="2">
<li>This argument also does not work. Even in present system once you retire you are free to do whatever you want. Grandparents are currently free to take care of their grandkids for free.</li>
</ol>
<p>It is true that as population declines there will be more people in retired age but not more grandparents per family. Every grandchild can have at most 4 grandparents. Just having more retirees does not mean that family has more labor available, since some random retired couple won't be baby sitting children they are not related to for free.</p>
<p>Moreover, the demographic data generally show, that population decline is not only driven by families that have kids, if family has one kid they often go onto having two, but rather by rising number of childlessness <a href="https://asia.nikkei.com/Spotlight/Society/Japan-leads-world-in-childless-middle-aged-women" rel="nofollow noreferrer">(Nikkei 2023)</a>. Hence the workload on old people who have any grandkids will be more or less the same, there will just be a lot of old people without any grandkids.</p>
<hr />
<p>As a consequence, population decline, ceteris paribus, will produce Japan with lower incomes, higher taxes (to maintain public goods that have fixed costs like infrastructure), lower government benefits, more stagnant economy, compared to contrafactual Japan that would keep its population at a current level. Of course, you can always fantasize some new revolutionary technology that would prevent that, but if you want to be realistic you should look at past and present  empirical evidence.</p>
<p>However, will this be bad? Maybe being poorer, and stagnant is good. That is a question for philosophers not for economists to answer. There is no objective economic principle, and actually likely not even any objective moral principle that says its good for country to be prosperous. That depends on your values and moral philosophy.</p>

CC BY-SA 4.0
2024-02-02T13:47:02.457Z
2024-02-02T13:53:11.970Z
2024-02-02T13:53:11.970Z
1muflon1
<blockquote>
<p>Isn't population decline and ageification of Japan, a good thing?</p>
</blockquote>
<p>It certainly is, and for reasons other than free, in-house childcare.</p>
<p>Population decline leads to lower supply in the job market. The scarcity of workers will prompt consumers (i.e., employers) to increase compensation and improve work conditions. One of the most available opportunities for improvement is the option of working from home (excluding blue-collar jobs, of course), since spending on a daily basis a few hours on a train just to get to the workplace is not enviable at all. Japan's <a href="https://www.youtube.com/watch?v=o9Xg7ui5mLA" rel="nofollow noreferrer">overcrowding</a>, long work schedules, and suicide rate debunk notions of quality of life.</p>
<p>The decline is likely to put pressure also on the government to reduce the tax burden, lest workers move to economies where the governments are more competitive. A similar conclusion applies in regard to bureaucracy as well as to processes such as opening a bank account.</p>
<p>Altogether, Japan will have to become flexible and dynamic in order to overcome the challenges that population decline entails. An oversupply in the job market facilitates the preservation of obsolescence.</p>

CC BY-SA 4.0
2024-02-03T12:20:10.210Z
You seem to look at things only from partial equilibrium and ignore everything in economy is interconnected. Why would demand for workers not change across the board? What you talk about happened during the black plague that primarily killed peasants, leaving nobility with high demand for labor, but with aging you have exactly the opposite problem, masses of poor and middle class people exiting labor force not producing anything. Retired people generate less demand in all countries, this well known. If supply of labor decreases, but demand for labor decreases at the same time then there
Lorenzo Pozzi
CC BY-SA 4.0
2024-02-03T12:24:45.610Z
won't be any pressure on better wages and working conditions. Also Japan has pay as you go retirement system. Even if Japan would reform the system today, they could not apply the new system to people who are close or even half way to retirement, so the change would take at least 20-30 years to implement. Again partial equilibrium thinking, so the government lowers taxes for the workers, but where does it then get money for retirees? Also Japan is no longer dictatorship, those retirees can vote and every year they are becoming stronger and stronger voting block, thinking they will vote
Lorenzo Pozzi
CC BY-SA 4.0
2024-02-03T12:30:22.940Z
to reduce their pensions so taxes can go down is delusional. Moreover, the Japanese workers won't have anywhere to go. Europe and USA have strong immigration law for anyone but refugees, Australia even for refugees if you want to emigrate to USA legally you have to wait 20-30 years. Europe has even much higher taxes. South Korea is aging as well, China is dictatorship and Chinese don't like Japanese due to the history between the countries, so where would the Japanese emigrate? Japan would have to increase taxes extremely to make the wait to legally migrate to EU or USA worth while.
Lorenzo Pozzi
CC BY-SA 4.0
2024-02-03T14:39:53.770Z
@LorenzoPozzi (1) Demand for labor would decrease as well, but definitely not as much as supply. (2) The black plague comparison is anachronistic because it ignores huge differences in technology. (3) I disagree with your implication that today's "*masses of poor [...] people*" is a good thing. (4) Neither the strongest voting block nor the most stringent laws on immigration can override core principles of Economics; at some point decisions need to get in touch with the economic reality. Regulatory stringency reflects oversupply of labor and betrays the narrative about population decline.
Iñaki Viggers
CC BY-SA 4.0
2024-02-03T11:20:06.840Z
2024-02-03T11:20:06.840Z
Iñaki Viggers
<p>So hear me out,</p>
<p>Essentially my argument is 2 pronged:</p>
<ol>
<li>Automation is shrinking the demand for blue-collar jobs, so a shrinking population is a good thing, since it means lesser competition but not really lesser output as the workload can be offset with robots. So instead of having a 100 people in factory, you would just have 30, who would be in charge of orchestrating , repairing and verifying the product. It also helps, that the Japan has the <a href="https://atlas.cid.harvard.edu/explore" rel="nofollow noreferrer">highest economic complexity index</a>.</li>
<li>An argument is usually made that  more older people mean more burden, but as job contraints become looser due to above, more people would think about having children, and who better to care for them but a nice pair of free grandparents, thus fullfiling the demand for childcare.</li>
</ol>
<p>How effective is this argument ?</p>

<labor-economics><population-economics>
Isn't population decline and ageification of Japan, a good thing?
Leibniz's Alien
# Isn't population decline and ageification of Japan, a good thing?

(Asked by: username_0 on 2024-02-02)

So hear me out,

Essentially my argument is 2 pronged:

1. Automation is shrinking the demand for blue-collar jobs, so a shrinking population is a good thing, since it means lesser competition but not really lesser output as the workload can be offset with robots. So instead of having a 100 people in factory, you would just have 30, who would be in charge of orchestrating , repairing and verifying the product. It also helps, that the Japan has the [highest economic complexity index](https://atlas.cid.harvard.edu/explore).
2. An argument is usually made that more older people mean more burden, but as job contraints become looser due to above, more people would think about having children, and who better to care for them but a nice pair of free grandparents, thus fullfiling the demand for childcare.

How effective is this argument ?

**Tags:** labor-economics, population-economics

---

## 2 answers

### Answer by username_1 on 2024-02-02. Score: 1

This argument does not really work.

1.A Automation actually does not necessarily shrink demand for labor. Often automation actually increases demand for labor. Hence the premise of the argument 1 is simply wrong.

There are two effects of automation, automation is complementary to some labor and automation is substitute for some labor. Historically, and also presently, robots and other automation technologies were in net more of a complements rather than substitutes for labor (see [Autor 2015](https://www.aeaweb.org/articles?id=10.1257%2Fjep.29.3.3&source=post_page)). Even more autonomous robots could be complements depending on the degree of autonomy (e.g. if worker has to explain it tasks to be performed instead of robot figuring it out on its own).

Of course, nobody can predict future, its possible that in future automation will have more of an substitutive effect than complementary effect, who knows, but that is at a best speculation. So far we have 200 years of history showing automation generating more demand for new jobs than destroying it. If you believe this pattern will not only stop working, but go into complete reversal, in next 50 years (over which Japan's population is projected to shrink by almost 50% according to [Statista](https://www.statista.com/statistics/607936/japan-forecast-population-age-group/), and due to aging working population will shrink even faster), you need to support this with some solid evidence.

1.B Higher population allows actually for more specialization and for more high skill jobs. There is a reason why you won't find highly specialized professions such as neurosurgeons having clinics in sparsely populated villages, but only in large cities. Paradoxically, population decline, ceteris paribus, would be expected to reduce demand for highly skilled and specialized workforce.

I use ceteris paribus, because a population decline does not just mean people randomly die from every part of population pyramid, so there might be some industries where the change of age composition creates more demand (e.g. geriatric specialized care), but conversely there are areas where the decline in demand for high skill workers will be even further accelerated.

1.C Large population actually promotes technological development. Basic technology has large positive spillover, since you just need to invent it once and then everyone can copy it, and even more specialized technology has patents which eventually expire.

As the literature on endogenous growth shows (see Romer Advanced Macroeconomics ch3) Technological progress does not really depend on how many scientists we have per capita but how many scientist we have in total. A small population of 100 people that is composed of 50% of scientists (meaning 50 people do some science) will progress more slowly than large population of 10000 people where only 1% does science (meaning that large population has 100 scientists). This is again because of nature of technological progress, you just have to invent new idea once, you don't need to reinvent the wheel every time from scratch (no pun intended).

Hence as population declines it is less likely you will see some rapid technological progress. You might see stagnation, or even decline due to point 1.B (there might be academic areas that simply die out due to lack of demand).

2. This argument also does not work. Even in present system once you retire you are free to do whatever you want. Grandparents are currently free to take care of their grandkids for free.

It is true that as population declines there will be more people in retired age but not more grandparents per family. Every grandchild can have at most 4 grandparents. Just having more retirees does not mean that family has more labor available, since some random retired couple won't be baby sitting children they are not related to for free.

Moreover, the demographic data generally show, that population decline is not only driven by families that have kids, if family has one kid they often go onto having two, but rather by rising number of childlessness [(Nikkei 2023)](https://asia.nikkei.com/Spotlight/Society/Japan-leads-world-in-childless-middle-aged-women). Hence the workload on old people who have any grandkids will be more or less the same, there will just be a lot of old people without any grandkids.

---

As a consequence, population decline, ceteris paribus, will produce Japan with lower incomes, higher taxes (to maintain public goods that have fixed costs like infrastructure), lower government benefits, more stagnant economy, compared to contrafactual Japan that would keep its population at a current level. Of course, you can always fantasize some new revolutionary technology that would prevent that, but if you want to be realistic you should look at past and present empirical evidence.

However, will this be bad? Maybe being poorer, and stagnant is good. That is a question for philosophers not for economists to answer. There is no objective economic principle, and actually likely not even any objective moral principle that says its good for country to be prosperous. That depends on your values and moral philosophy.


---

### Answer by username_2 on 2024-02-03. Score: -3

> Isn't population decline and ageification of Japan, a good thing?

It certainly is, and for reasons other than free, in-house childcare.

Population decline leads to lower supply in the job market. The scarcity of workers will prompt consumers (i.e., employers) to increase compensation and improve work conditions. One of the most available opportunities for improvement is the option of working from home (excluding blue-collar jobs, of course), since spending on a daily basis a few hours on a train just to get to the workplace is not enviable at all. Japan's [overcrowding](https://www.youtube.com/watch?v=o9Xg7ui5mLA), long work schedules, and suicide rate debunk notions of quality of life.

The decline is likely to put pressure also on the government to reduce the tax burden, lest workers move to economies where the governments are more competitive. A similar conclusion applies in regard to bureaucracy as well as to processes such as opening a bank account.

Altogether, Japan will have to become flexible and dynamic in order to overcome the challenges that population decline entails. An oversupply in the job market facilitates the preservation of obsolescence.

> **Comments:**
> **username_3**: You seem to look at things only from partial equilibrium and ignore everything in economy is interconnected. Why would demand for workers not change across the board? What you talk about happened during the black plague that primarily killed peasants, leaving nobility with high demand for labor, but with aging you have exactly the opposite problem, masses of poor and middle class people exiting labor force not producing anything. Retired people generate less demand in all countries, this well known. If supply of labor decreases, but demand for labor decreases at the same time then there  
> **username_3**: won't be any pressure on better wages and working conditions. Also Japan has pay as you go retirement system. Even if Japan would reform the system today, they could not apply the new system to people who are close or even half way to retirement, so the change would take at least 20-30 years to implement. Again partial equilibrium thinking, so the government lowers taxes for the workers, but where does it then get money for retirees? Also Japan is no longer dictatorship, those retirees can vote and every year they are becoming stronger and stronger voting block, thinking they will vote  
> **username_3**: to reduce their pensions so taxes can go down is delusional. Moreover, the Japanese workers won't have anywhere to go. Europe and USA have strong immigration law for anyone but refugees, Australia even for refugees if you want to emigrate to USA legally you have to wait 20-30 years. Europe has even much higher taxes. South Korea is aging as well, China is dictatorship and Chinese don't like Japanese due to the history between the countries, so where would the Japanese emigrate? Japan would have to increase taxes extremely to make the wait to legally migrate to EU or USA worth while.  
> **username_2**: @LorenzoPozzi (1) Demand for labor would decrease as well, but definitely not as much as supply. (2) The black plague comparison is anachronistic because it ignores huge differences in technology. (3) I disagree with your implication that today's "*masses of poor [...] people*" is a good thing. (4) Neither the strongest voting block nor the most stringent laws on immigration can override core principles of Economics; at some point decisions need to get in touch with the economic reality. Regulatory stringency reflects oversupply of labor and betrays the narrative about population decline.  

---

