Have Baby, Claim Cash Reward

When Yoshie Kikuchi gave birth to her third child, Saya, she got more than just a bundle of joy: Her local government gave her a certificate of gratitude and gift of 1 million yen -- about $10,000.

That's right -- a cash reward for having more children.

The Japanese already have one of the lowest birthrates in the world, and it is growing worse by the year as young people show less interest in settling down and having children.

Hard at Work

Most say it's too expensive and too difficult to raise kids in today's Japan, where homes are too small and working hours too long.

A growing number of well-educated women now have careers and lifestyles they don't want to give up for families -- at least not yet.

"People are marrying later and later in their lives," said Yuko Kawanishi, a professor at Tokyo Gakugei University. "That really lowers the overall … birthrate."

So much so, that by the time today's toddlers reach middle age, it's estimated that Japan's population will have been sliced by 20 percent.

Danger Ahead?

While many in the most congested cities here might appreciate a Japan with far fewer people, Japan's shrinking population is actually a potential catastrophe in the making.

In the next three years, 10 million Japanese baby boomers will retire, dramatically increasing the cost of health and welfare benefits. If current trends continue, there simply won't be enough young workers to pay for those costs -- unless, of course, Japan can convince the younger generation it's in their interest to start raising bigger families again.

They've already raised that cash incentive from 1 million yen to 1½ million yen in one small town, which delights Naoko Fujii, a rare mother in Japan expecting a fourth child. The cash certainly will help with the high price of diapers and she's proud to be doing her small part for the future of her country.

ABC News' Mark Litke reported this story for "World News Tonight."