Japan, the world's third largest economy, has been experiencing the issue of population aging to an unprecedented degree. More than 20 percent of Japan's population is over 65 years old, the highest proportion in the world. By 2030, one in every three people will be 65 or older, and one in five people 75-plus years old. The rapid aging process in Japan is striking because of the high rate of economic growth and changes in family and social structures in the postwar period.

The decline in Japan's fertility rate has been attributed to several factors such as changing lifestyles, people marrying later in life or not marrying at all and the economic insecurity of younger generation. Increasing life expectancy is another driving force behind the aging trend. Fifty years ago, life expectancy at birth was about 72 years; it has since climbed to 84 years.

There are two fundamental aspects behind Japan's aging population. One aspect is the increase in the proportion of the elderly in the total population. The other is the slower growth of the population, arising directly from the declining fertility rate. The former affects Japan's economic performance by increasing the social security burden and benefits. The latter has a direct impact on economic growth by reducing the labor force, which is a major factor in production.