Population Decline, Employment and Prosperity: Setting the Conditions for Quality Job Creation in All Regions of Japan

A growing imbalance in population between urban and rural areas is dysfunctional and undermines the quality of life in Japan. Only an integrated approach capitalising on talent and innovation and drawing on effective governance mechanisms can reverse this trend and contribute to delivering prosperity in all regions. This article will demonstrate the need for a balanced and differentiated approach in Japan that improves growth and job creation. The article will review the structure of population change in Japan and compare it with other countries. It will show that the share of the population in big cities is growing in Japan as well as in other countries, though there is no unique trend among OECD countries. It will then show the importance of taking a balanced approach to the supply and demand for skills. The supply of skills is key for productivity and economic growth, but if skills are not fully used in the workplace, the economy risks becoming less resilient and the regions that host them less attractive. The article will show that rural areas in Japan already feature low skills equilibrium. Stimulating growth and job creation in a way that can transform rural areas into attractors of population requires an integrated approach that combines factors on both the supply and demand side. The article will draw on international evidence to show that this approach needs to be differentiated across the national territory to take into account the diversity of contexts and the various strengths on the supply or demand side of skills. It requires strong governance mechanisms at the local level, which includes flexibility in the management of policies that enable stronger co - ordination between workforce and economic development, as well as effective partnerships and strong capacities.