Something dramatic is happening everywhere all at once: fertility is plummeting, with major implications for economic growth and social stability. Yet

Why is Fertility Collapsing, Globally? - by Alice Evans

submited by

Style Pass

2024-11-08 15:00:06

Something dramatic is happening everywhere all at once: fertility is plummeting, with major implications for economic growth and social stability. Yet public discourse is seriously weird, crudely:

So, to contribute to public conversations, let me outline the descriptive data on collapsing fertility, why this matters for economic growth, share ideas for future research, and propose a test for any new theory.

When Jesús Fernández-Villaverde looked into global population forecasts, he realised that UN predictions always painted a rosy picture, but reality was rather alarming.

Older people have far lower rates of employment. Fewer young people also means fewer startups. As shown by Hopenhayn and colleagues (2022), this shifts the entire economy toward older, larger, but less dynamic firms. Firm aging may help explain increased market concentration, declining business dynamism, and changes in labor's share of income - all key factors in economic vitality. Already in the United States, population aging has begun to suppress economic growth.

Across the European Union, tax revenue is increasingly spent on elderly healthcare and pensions. Between 2003 and 2019, Spain’s pension expenditure-to-GDP ratio rose sharply - by 3.8 p.p. This makes it even harder to invest in green industrial policy and climate mitigation after terrible floods.