Low Birth Rates: What Are the Economic Implications?

This article is an excerpt from the Shortform book guide to "Numbers Don't Lie" by Vaclav Smil. Shortform has the world's best summaries and analyses of books you should be reading.

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How long have fertility rates been falling? What are the economic implications of low birth rates?

Falling fertility rates have the potential to significantly alter global dynamics in the 21st century. From 1950 to 2000, the global fertility rate dropped from around 5 to 2.6. If global fertility rates keep declining at the same rate, severe economic consequences are in order.

Keep reading to learn about the economic repercussions of increasingly low birth rates.

Dropping Fertility Rates May Lead to a Decline in Quality of Life

Fertility rates, or total births per woman in a given population, have changed significantly in the last century, especially in developed nations.

To maintain a stable population size, you need a fertility rate of approximately 2.1. Countries with sustained fertility rates below 2.1 will see a gradual population decline, which can have detrimental effects. By 2050, it is estimated that three-quarters of the global population will live in countries with a fertility rate below the replacement level of 2.1. Many developed nations are already well below this level. In 2019, Japan, Spain, Italy, and Romania had fertility rates of 1.3. Japan, Ukraine, Greece, and Croatia sat at 1.4. 

If these trends continue, there will be severe economic repercussions, writes Smil: To grow economically, a society needs a young labor force to maintain infrastructure and take care of the elderly. Developed nations with increasingly low birth rates will likely see a sharp decline in standards of living as the country buckles under the weight of increased healthcare costs, labor shortages, and lower economic output. To combat low fertility rates, many countries will likely implement policies that encourage childbirth and immigration, but it remains to be seen if that will be enough to maintain population size.

New Studies on Population Growth

Recent studies provide more insight into the potential impact of fertility rates and population growth in the 21st century. 2020 population forecasts predict a global peak of 9.7 billion people in 2064, which goes against the common prediction of continued growth throughout the century. By 2100, it’s estimated that the global population will number around 8.8 billion, and 183 out of 195 countries will have fertility rates below 2.1. 

Like Smil, researchers suggest that population decline will have dramatic effects on economic, social, and geopolitical issues across the globe. As economic growth stagnates worldwide, experts expect population decline to be a major factor in policy decisions. Many countries will need radical changes in immigration policies, and protecting the sexual and reproductive rights of women will be of increasing importance.

Low Birth Rates: What Are the Economic Implications?

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Darya Sinusoid

Darya’s love for reading started with fantasy novels (The LOTR trilogy is still her all-time-favorite). Growing up, however, she found herself transitioning to non-fiction, psychological, and self-help books. She has a degree in Psychology and a deep passion for the subject. She likes reading research-informed books that distill the workings of the human brain/mind/consciousness and thinking of ways to apply the insights to her own life. Some of her favorites include Thinking, Fast and Slow, How We Decide, and The Wisdom of the Enneagram.

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