Does Immigration Increase Japanese GDP?

Abstract

This study analyzes the correlation between emigration intake and economic

growth in Japan. The hypothesis is that immigration acceptance and Japanese gross

domestic product (GDP) have positive correlation. As population aging in Japan will get

further serious in the future, immigration intake is expected to be a possible solution to

compensate for the lack of labor force growth. Nevertheless, few quantitative studies have examined the impact of immigration on Japanese economic growth.

This study utilized immigration data from 1980 to 2005 every 5 years in 47

prefectures in Japan to run regressions. Dependent variables examined in the regressions are: real GDP, real GDP pre capita and real GDP per worker. Especially the latter two models are crucial indicators to see substantial well-being of individuals in depopulation society. Declining in labor population puts downward pressure on total economic output, but it is not necessarily the case in output per capita and worker. Real GDP per capita and worker would be more important indexes to consider immigration intake rather than conventional total real GDP.

In conclusion, the study found immigration intake in Japan had positive correlation

with the output in all models. In the models of real GDP per capita or worker, immigration

induces negative dilution effect on capital per capita or worker. However, positive impacts of immigration such as higher accumulative saving or complementing holes in labor markets are expected to surpass the negative effect. The study indicates potential growth by immigration intake in the future. If Japan aggressively introduces a selective migration policy for high skilled labors, the influence of immigration on the output would be higher. Yet, not only the economical aspect, also social aspects affected by immigration in distant future have to be carefully considered before accepting immigration.