The Core of Japan's Declining Birthrate Is Not Childcare Support: Interrogating How 140 Trillion Yen of Social Expenditure Is Split

Japan's 2025 birth count was 705,809[1] (preliminary figure), setting a record low for the tenth consecutive year.

The shock embedded in this number lies not simply in the fact that births have fallen. The National Institute of Population and Social Security Research (IPSS), in its medium-variant projection published in 2023, had forecast that the birth count would not fall into the 700,000s until 2042. Reality broke through that projection 17 years early.

Tracking the pace of decline in ten-year intervals underscores the momentum. The birth count was 1,005,721[2] in 2015, 770,759[3] in 2022, and 686,173[4] in 2024 — the first time in recorded history the figure fell below 700,000. That represents a 32% decline in ten years.

The total fertility rate shows no sign of stabilizing either. The confirmed 2024 figure was 1.15[5], the lowest ever recorded, representing a drop of 0.3 points from 1.45 in 2015 over a single decade. Tokyo fell below 1.0 at 0.99 in 2023, the first time any prefecture-level jurisdiction had crossed that threshold.

Given that IPSS had projected a trough in 2023 followed by a recovery to 779,000 in 2024, it is no exaggeration to say that the very assumptions underpinning the projection have collapsed.

The "Lost Opportunity" of the Baby-Boom Junior Generation

Understanding the structural causes of the declining birthrate requires going back to the 1990s.

The baby-boom junior generation (born 1971-1974) produced more than 2 million births per year, for a four-year combined total of approximately 8 million. From a demographic standpoint, the late 1990s to early 2000s (when this cohort was entering peak child-bearing age) represented the last major opportunity to reverse the decline in births.

What awaited them instead was the employment ice age and a rapid expansion of non-regular work. The recruitment crisis intensified after the burst of the asset bubble in 1993; in 1996 the range of industries permitted to use dispatched workers was broadened; in 1999 dispatch employment was liberalized in principle; and in 2003 it was extended to manufacturing.

On the policy side, the Angel Plan, formulated in 1994, was positioned as the centerpiece of anti-declining-birthrate policy. In practice, however, its content amounted to what was effectively a "nursery plan": expanding nursery school capacity and extending opening hours. It never reached the fundamental problem of the economic foundation for marriage among the unmarried and non-regular workers, and the narrow equation of "declining-birthrate measures equals nursery-school measures" would persist for the next thirty years.

The results are inscribed in the data. By age 50, the baby-boom junior generation's unmarried rate was 28.25%[6] for men and 17.81% for women. The fact that approximately 30% of the most populous generation in Japanese history never married had a devastating effect on births.

Social Expenditure by Policy Area: A 4.3-to-1 Asymmetry

FY2023 social expenditure on the OECD basis totalled 139.8561 trillion yen[7]. Split by policy area, the structural distortion shows in stark terms.

The largest area is health at 59.0333 trillion yen[7] (42.2%[7]), which is not split by age and reaches every generation. Old age follows at 49.3574 trillion yen[7] (35.3%[7]). Family stands at 11.5122 trillion yen[7] (8.2%[7]). Old age to family is 4.3 to 1.

The childcare support levy, collection of which began in April 2026, will raise approximately 600 billion yen[8] in its first year, scaling up to approximately 1 trillion yen in FY2028. The average monthly burden for employees enrolled in employer-sponsored health insurance is approximately 450 yen.

Comparing this scale to old-age spending makes the structural asymmetry unmistakable. The first-year 600 billion yen is 1.2% of the 49.4 trillion yen for old age; even the full 1 trillion yen in FY2028 comes to 2.0% (this division is ours). The reason the childcare support levy is criticized as "a drop in the bucket" for declining-birthrate policy is not the absolute size of the amount, but its relative position within the distribution structure.

Silver Democracy: Why the Distribution Does Not Change

The entrenchment of the generational distribution reflects the generational disparity in voting behavior.

In the 2021 lower-house election, the voter turnout rate among people in their twenties was 36.50%[9], compared with 71.38% for those in their sixties, a gap of approximately 35 percentage points. In the most recent 2024 lower-house election, the turnout rate for those in their twenties remained at 34.62%[10].

As the proportion of elderly voters in the electorate grows and that cohort votes at overwhelmingly higher rates, a political structure emerges in which policies targeting the elderly receive priority. This is the phenomenon known as silver democracy. Because winning elections requires elderly votes, cutting pension and healthcare benefits amounts to political suicide. As a result, the "principled argument" for revising the generational distribution becomes extraordinarily difficult to advance through democratic channels.

Generational Accounting: A Lifetime Gap of 50 Million Yen

The generational accounting calculations by Satoshi Shimazawa render this asymmetry as a lifetime figure.

The baby-boom generation (born 1946-1950) receives a net lifetime benefit of +18.2 million yen[11] (benefits exceeding contributions), while those born in the 1990s face a net lifetime burden of minus 30 million yen. The gap between the two generations reaches approximately 50 million yen, and Japan's intergenerational imbalance is exceptional by international standards. The burden on the junior generation is 2.69 times (a 169% increase)[12] that of the senior generation, far exceeding the U.S. ratio of 1.51 and Germany's 1.92.

Claiming to "stop the declining birthrate" while maintaining a structure that imposes a net lifetime burden of 50 million yen on the young is an institutional self-contradiction.

Prescription 1: Change the Generational Distribution of Social Security

Debate on declining-birthrate countermeasures invariably begins with "what to add": expanding child allowances, making childcare free, extending parental leave. Yet without engaging with the distribution structure within the 139.8561 trillion yen of social expenditure, any additional childcare support remains a fine-tuning of the margins within elderly-oriented spending.

The government has nominally adopted "all-generation social security" as its banner and in 2022 established the Council for Building All-Generation Social Security. In October 2022 the out-of-pocket co-payment rate under the latter-stage elderly healthcare system was raised from 10% to 20% for those above a certain income threshold. However, the policy affects only approximately 20% of the elderly population (roughly 3.7 million people) and has not altered the fundamental structure of the three elderly-oriented categories.

International comparison shows a wide gap. The Children and Families Agency puts family-related social spending as a share of GDP at 3.42%[13] in Sweden, 2.71%[13] in France, 2.42%[13] in Germany and 2.41%[13] in the UK, against 2.01%[14] for Japan (1.74% in FY2019).

The question is not "spend more." It is how to restructure the distribution of 139.9 trillion yen.

Prescription 2: Build an Economic Foundation for Marriage

Academic research consistently shows that cash transfers have only a limited effect on the fertility rate. Professor Shintaro Yamaguchi (University of Tokyo) has noted that "cash transfers do raise the birth rate, but the effect is not particularly strong," and argues that expanding childcare services and promoting male parental leave uptake are more effective.

The problem that comes before childcare and leave

Yet there is a problem that precedes childcare and parental leave. An increasing number of young people cannot reach the point of getting married in the first place.

The Gender Equality White Paper states that "among men, the unmarried rate for non-regular workers equals or exceeds that of all workers across every age band" (2014 edition, Figure 2). Figure 2 is a chart by five-year age band and prints no per-band values, but the gap between non-regular and regular workers opens clearly from the late twenties through the early forties. The gap in unmarried rates by employment type cannot be explained by income differences alone. Data show that even non-regular male workers earning more than 5 million yen annually have unmarried rates above the national average, suggesting that employment type itself constitutes a barrier in the marriage market.

An income of 3 million yen per year is treated as the threshold that constitutes a "family formation barrier," and approximately 79.5% of non-regular male workers in their twenties fall below this level. The issue is not whether to have children but rather the economic structural problem of being unable to reach an income level that makes marriage financially viable.

Analysis of OECD data by Associate Professor Yu Shibata (Kyoto University) found that only immigration and childcare expansion had a statistically significant positive effect on fertility, while child allowances were not significant. This suggests that fundamentally improving the quality of employment for younger generations may be more cost-effective as a declining-birthrate countermeasure than the "visible" policy of increasing child allowances.

Prescription 3: Redesign Institutions on the Premise of Population Decline

Even if births were to recover from this point, any effect on the working-age population would take more than twenty years to materialize. In other words, designing institutions for a birth count of roughly 700,000 is unavoidable for the next twenty years.

RIETI argued in 2025 research that "how to achieve constructive contraction" is the truly necessary policy. The Science Council of Japan called in 2020 recommendations for "setting a population-shrinking society as a flourishing society."

The Population Strategy Council, in its 2024 report, identified 744 municipalities[15] as being at risk of disappearance. School mergers and closures number 293 over a two-year period, and closures of regional financial institutions, supermarkets, and gas stations continue to multiply.

The time has come to question the very goal of "stopping the declining birthrate." What is needed is not a fixation on "increasing" births but a shift to an approach of "designing a managed contraction": not giving up on demographic recovery, but concretely envisioning what a sustainable society looks like with a birth count of 700,000.

Inspiration for This Article

This article was inspired by the following post and represents ISVD's independent data analysis built upon that starting point.

• Hitoshi Kinoshita's note post "Japan's 2025 birth count is 705,809" (April 2026)

References

Reference Books

• 『世代間格差 — 人口減少社会を問いなおす』 (Generational Inequality: Rethinking Population-Decline Society)（外部サイト、新しいタブで開きます） (Original: 『世代間格差 — 人口減少社会を問いなおす』) by Hisakazu Kato (Chikuma Shinsho, 2011): A foundational text using generational accounting methodology to analyze intergenerational inequality across social security, labor markets, and public finance
• 『社会保障の「不都合な真実」— 子育て・医療・年金を経済学で考える』 (The "Inconvenient Truth" of Social Security: Thinking about Childcare, Healthcare, and Pensions through Economics)（外部サイト、新しいタブで開きます） (Original: 『社会保障の「不都合な真実」— 子育て・医療・年金を経済学で考える』) by Wataru Suzuki (Nikkei Publishing, 2012): A work that exposes the institutional contradictions in childcare, healthcare, and pension systems through the lens of demographics and public finance
• 『未来の年表 人口減少日本でこれから起きること』(A Calendar of Population Decline: What Will Happen in Japan from Now On)（外部サイト、新しいタブで開きます） (Original: 『未来の年表 — 人口減少日本でこれから起きること』) by Masashi Kawai (Kodansha Gendai Shinsho, 2017): A bestseller that has sold more than one million copies, using a "population-decline calendar" to pinpoint specific years when institutional assumptions will collapse
• 『地方消滅 東京一極集中が招く人口急減』(Regional Disappearance: The Population Crash Brought About by Hyper-Concentration in Tokyo)（外部サイト、新しいタブで開きます） (Original: 『地方消滅 — 東京一極集中が招く人口急減』) edited by Hiroya Masuda (Chuko Shinsho, 2014): The original source of the list of municipalities at risk of disappearance, warning that 896 municipalities face an existential crisis, winner of the 8th Shinsho Grand Prize