This chapter discusses the past, present, and future of demographic transition, using many indicators. Some of important impacts of Japan's unprecedented population aging on its postwar economy are analyzed by drawing heavily upon estimates from the National Transfer Accounts (NTA)—Japan project, ranging from the first and second demographic dividends to life cycle reallocations. To raise marital fertility to alleviate the burden of rapid population aging on the economy, since 1990 the Japanese government has formulated and implemented a series of pronatalist programs and policies. Although the awareness of the demographic dividends is still fairly limited in Japan, their use, particularly that of the accumulated demographic dividend which is likely to remain substantial for the next few decades, could be an option for Japan to help resume steady economic growth.

Over the past few decades, the world population has been ageing at a phenomenal pace. Some demographers claim that population ageing in the twentieth century represents a human success story, and that for the first time in the history of mankind, human populations have the luxury of ageing (Kinsella and Velkoff, 2001).

Global population growth has been slowing down over the past few decades primarily because of the almost universal reduction in fertility. From 1970 to 1975, the number of countries with below-replacement fertility was 19, increasing to 65 by the period from 2000 to 2005. The overwhelming majority of those low-fertility countries are in the developed regions. However, the number of countries in the developing regions with below-replacement fertility has been increasing substantially over the past three decades, reaching 19 in the recent past. The number of countries with lowest-low fertility, being those with a total fertility rate (TFR) below 1.3, has grown from 0 to 17 during the same period.

This paper attempts to explain both the long-term downward trend in coresidence of newly married Japanese couples with parents and the surprisingly large and sustained upturn in coresidence precipitated by the 1998 economic crisis. A multivariate analysis shows that the main causes of the long-term decline in coresidence at time of marriage are the declining percentage of arranged marriages, rising mean age at marriage for wives, rising levels of education among both husbands and wives, and the declining percentage of couples who grow up in rural areas. The contributions of these variables are partially offset by changes in the mix of couple types, especially the increase in the percentage of couples in which the husband is an eldest son. The analysis of the upturn in coresidence precipitated by the 1998 economic crisis reveals a complex interplay between changes in age at first marriage, family structure and coresidence.