Hello, A Baby!

More babies are coming here: Japan's fertility rate rose last year for the first time in six years in 2006.

By KOZO MIZOGUCHI Associated Press Writer
TOKYO (AP) -- The fertility rate - the average number of children born to a woman over her lifetime - stood at 1.32 babies per woman in 2006, up 0.06 point from a record low of 1.26 in 2005, the Health Ministry said on its Web site.

"The latest figure alone doesn't indicate whether there is a turnaround in the country's recent trend of falling number of births," said Emi Sato of the vital statistic division with the Health Ministry.

....Ministry officials say the rise in the country's fertility rate was due partly to Japan's economic recovery from a decade-long slowdown, which encouraged more people to get married and have babies.

....A declining birth rate - a figure that expresses the number of children born every year in a given population - threatens Japan with a potential a labor shortage, tax shortfalls and pension problems as fewer taxpayers support an aging population.

In an international comparison, the fertility rate in the United States was 2.6 in 2005 and 2.1 in France, both preliminary figures, the report said. It was 1.36 in Germany, 1.33 in Italy, 1.75 in Sweden, all in 2004, and 1.71 in Britain in 2003. The fertility rate stood at 1.13 in South Korea, 1.25 in Singapore.

...Some local governments offer special subsidies for couples to have more babies. But many Japanese companies typically expect long hours from workers, and many women with careers feel they cannot meet the demands of both work and family and have to choose one or the other.

Three interesting points are:

(1) The rise in the country's fertility rate was due partly to Japan's economic recovery from a decade-long slowdown, which encouraged more people to get married and have babies.

It shows that there may exist a positive correlation between the country's fertility rate and the economic boom. The sight that the aggregate economic activities affect the fertility is interesting. We may have some important policy implications in controlling the population.

(2) Some local governments offer special subsidies for couples to have more babies.

I would like to know about the socioeconomic effects of the special subsidies for more babies. Are the subsidies or tax cuts for more babies really effective? Do women have the decision function that includes a tax as a variable? Is the derivative of the function with respect to tax negative? This is a good empirics, I think.

(3) A declining birth rate threatens Japan with a potential labor shortage, tax shortfalls and pension problems as fewer taxpayers support an aging population.

The problem of the decrease in tax and pension revenue due to fewer workers who support the old people is open to further dispute. The related issue is going to be reported in this blog. However, more Japanese are worried about the negative effects of the today's declining birth rate and are mumbling that the shortfall of tax revenue and pension benefit due to fewer children and aging population are coming to them soon. Is it right? Is it a groundless fear? I'll make it clear later.