This paper examines economic factors affecting the declining fertility rate in Japan. A major cause of this continuous decline is the increasing participation of women in the labor force. This, in turn, increases the opportunity costs of having children for a family. These opportunity costs are closely related to the scarcity of full-time jobs for women due to the ̃xed employment practices of major Japanese companies. A crucial policy for stabilizing the fertility rate is to reduce the opportunity costs of women by increasing child-care services and promoting the creation of jobs for those who are beyond the child-rearing age.
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