The big long-term problem with Japan’s economy is demographics - Is Immigration The Answer?

A declining population means that even if productivity and per capita gross domestic product rise at a decent clip, total growth will be low or even negative. That makes Japan’s mountain of debt -- the highest as a percent of GDP among rich nations -- hard to service. Meanwhile, an aging population means fewer workers to support each retiree.

Many solutions have been floated for this demographic problem. Work-life balance, it is hoped, will boost fertility, as women are no longer forced to choose between careers and raising children. Corporate governance reform should give productivity a boost. And robots, many believe, will substitute for human workers. But once in a while, someone asks me: Why doesn’t Japan try mass immigration?

For the U.S., Canada or Australia, mass immigration would be the natural solution to a labor shortage. In fact, immigration is the only reason that the U.S. has managed to keep its population growing about 0.5 percent to 1 percent a year in recent decades, even though the country's fertility rate is only enough to keep population constant. So isn’t immigration a no-brainer for graying, shrinking Japan?

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