Tokyo's latest attempt at creating a baby boom: a four-day work week

One of the more shocking demographic trends over the past 60 years has been the collapse in global fertility rates, especially in developed countries. In 1960, the total fertility rate for OECD countries (a collection of 38 developed nations) was 3.3 children per woman. In 2022, it was 1.5, and it’s still dropping. Additionally, the mean age at which women give birth to children has also been climbing, from 28.6 in 2000 to 30.9 in 2022. Economists have proposed numerous reasons for this, from the rising costs of childcare to people delaying marriage and starting families to focus on their careers, but the trend is undeniable: we’re having fewer babies in developed countries.

Declining fertility rates is a long-term problem for countries for a couple of reasons. First, people are living longer than ever, and developed countries tend to have income-replacement programs (like social security in the US) and health insurance (Medicare in the US) to support retirees. These programs are funded by taxes, and taxes are, as we all know, funded by working folks’ incomes. The problem here is pretty simple: declining birth rates translates to fewer future workers, and extended lifespans mean more, longer-living retirees. The math doesn’t math, and countries are going to have issues funding these programs.

Some countries have tried to take action to address this, like France attempting to raise its retirement age from 62 to 64, leading to strikes across the country. Other countries have made attempts to address the fertility crisis directly. Norway offers parents 12 months’ paid leave, and Hungary announced no personal income tax for life for women raising four or more children.

Japan, specifically, has one of the biggest fertility crises in the developed world. The Asian nation’s total fertility rate fell to 1.2, an all-time low, in 2023, and the country’s population has declined each year since 2005, with deaths outpacing births. Japan also has the second-longest life expectancy in the world, at 84.8 years. As a result, the Japanese government is desperate to increase its birth rate. One experiment: a four-day workweek.

On Sunday, Semafor reported that Tokyo’s city government is giving its staff a four-day workweek to try and boost the declining birth rate:

“The country’s population is expected to fall for the 16th year in a row, and municipal authorities hope that a four-on, three-off work schedule could make childcare easier and less expensive and, in turn, the thought of parenting less daunting.”

It’s an interesting trade-off. You’re basically betting on a short-term economic sacrifice (fewer labor days) for a long-term economic benefit (a larger future labor force). My two cents? While the extra day off may help, that alone isn’t going to bump fertility rates back above the 2.1 replacement rate. Even Norway, with its year of paid leave, and Hungary, with the incentive of $0 income taxes for life, have seen a modest uptick in fertility rates at best. Hungary’s fertility rate this year was only 1.5 (though that was a slight increase from last year), and Norway’s was 1.7. Ultimately, economic solutions can only do so much to solve social problems.