Immigration is tough for Japan

The big long-term problem with Japan’s economy is demographics. 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 gross domestic product 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 United States, Canada or Australia, mass immigration would be the natural solution to a labor shortage. In fact, immigration is the only reason that the United States 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?

It isn’t so simple. First, Japan’s population is projected to shrink by about 500,000 a year during the next few decades. Canceling out that loss with immigration would mean importing almost 0.5 percent of Japan’s population a year. Countering population aging would mean even more dramatic inflows. This would require Japan to be about as open to immigration as the United States.

That would be extremely difficult for a country that has traditionally been closed to immigration. Japan, unlike the United States, has no birthright citizenship law. People who get visas to work in Japan pass on their foreign citizenship to their children, unless those children go through the long process of naturalization. That tends to create a class of permanent outsiders, who suffer all sorts of institutional and informal discrimination.

This has happened at least twice before. Koreans who immigrated to Japan during their country’s period of colonial rule ended up passing their Korean citizenship to their descendants. These people, called “zainichi,” speak only Japanese and grow up with Japanese culture, but have Korean passports. Although many are highly entrepreneurial, they often endure discrimination and are the occasional targets of ugly racist movements. Only recently, due to high intermarriage rates, is this minority being assimilated into Japan’s society.

A second example was the wave of Brazilian guest workers, called “dekasegi,” who moved to Japan in the 1980s and 1990s. These Brazilians were ethnically Japanese, but culturally distinct and didn’t succeed at assimilating into Japanese society. In the late 2000s, with Japan’s economy on the rocks, many of these guest workers were asked to leave.

Japan’s closure to immigrants isn’t a result of racism - at least, not as people in the West conceive of the term. If so, then Japanese Brazilians or Koreans (who are ethnically indistinguishable from native Japanese) would have had little trouble assimilating. Instead, the groups were denied equal access to the economic totem pole.

Discrimination in Japan is based on nationality. Guest workers are not considered true immigrants, and their children and grandchildren are often seen as outsiders because of the absence of birthright citizenship. Employers tend to treat them as foreigners. Japanese individuals are generally very welcoming to foreigners - many of my close friends are Japanese - but corporations are a different story.

Without birthright citizenship, Japan can’t engineer an immigration boom to offset its population loss. With conservative politicians in perennial control of Japan’s government, there is little chance that the country will make big changes to its policies any time soon. Xenophobia, though not as common among the populace as many believe, seems to be rife at the higher levels of power.

So should we forget about the possibility that immigration will help Japan out of its funk? Perhaps not. Although mass immigration is probably off the table for now, high-skilled immigration is a different matter. With the country’s talent pool shrinking, the government is eager to attract these kinds of workers. Last year, a law was approved to grant skilled workers permanent residency after three years of employment in Japan (down from 10 years). That follows the implementation of a points-based immigration system in 2012, which favors skilled and educated workers.

These permanent residents will be different from the mass immigrant groups of earlier eras. Since they are entering as individuals instead of as groups, they probably will be in a better position to form Japanese friendships and marry Japanese spouses. They will most likely be highly proficient in Japanese, making the naturalization process easier.

Importantly, many of these immigrants will not be ethnically Asian. Their presence as naturalized Japanese citizens, with high positions in Japanese companies, will slowly acclimate the populace to the idea of true immigrants. Let’s hope that will eventually translate into less discriminatory hiring practices at Japanese companies, and more public support for pro-immigration policies.

In other words, though Japan probably isn’t ready for mass immigration, its new policy of high-skilled immigration may slowly change the country’s institutional discrimination against foreigners. Perhaps in a few decades, Japan will be ready to open itself more.

*The author is an assistant professor of finance at Stony Brook University.

by Noah Smith