From the baby boom to the baby bust
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
People live longer than ever before. This, as I noted recently, has created both opportunities and challenges. But postponing death is only a part of the demographic story. The other is the decline in births. The combination of the two is creating huge changes in the world we inhabit.
The notion of a “demographic transition” is almost a century old. Human societies used to have roughly stable populations, with high mortality matched by high fertility. In England and Wales in the 18th and 19th centuries, death rates plummeted. But fertility did not. The result was a population explosion, until, at last, fertility rates also collapsed.
As the benefits of economic growth and advances in medicine and public health spread, most of the world has followed a similar transition, but far faster. As a result, human numbers rose fourfold over the last hundred years, from 2bn to 8bn. In time, however, fertility followed mortality. The result has been plummeting fertility rates (births per woman) across most of the world. According to a study recently published in The Lancet, “Fertility is declining globally, with rates in more than half of all countries and territories in 2021 below replacement level.” For the world as a whole, the fertility rate was 2.3 in 2021, barely above replacement, down from 4.7 in 1960. For high-income countries the fertility rate was a mere 1.6, down from 3 in 1960. In general, poor countries still have higher fertility rates than richer ones, but they have been falling there, too. (See charts.)
What explains this collapse in fertility rates? An important part of the answer is the wonderful surprise that more children survived than expected (or desired). So, people started to practise various forms of birth control, contrary to what Thomas Malthus had predicted. But the desire to have many children also shrank sharply. This, fascinatingly, has happened in the teeth of reactionary gender ideologies. In the mullahs’ Iran, for example, the fertility rate has collapsed from 6.6 in 1980 to 1.7 in 2021.
A big reason for this shift was that, for their parents, children have moved from being a valuable productive asset to a costly consumption good. As the late Gary Becker argued, people came to desire a few high-quality (and so well-educated) children, rather than many of them. That was partly because this was the sort of worker the economy rewarded. But extended education makes children expensive in both time and money. Moreover, female participation in the economy rose dramatically in the 20th century, including in highly skilled careers. That raised the “opportunity cost” of producing children especially for mothers, the parents most bound to parenthood. So, they have children later, or even not at all.
In “The Economics of Fertility: A New Era”, an excellent survey published by the National Bureau of Economic Research in 2022, the authors argued that where public childcare is more generous women are encouraged to combine careers with having children. The absence of such help, it is suggested, helps explain the exceptionally low fertility rates in much of east Asia and southern Europe, where support for parents is limited. Yet this is no longer so clear: fertility rates have recently fallen well below replacement even in the Nordic welfare states.
This global shift towards very low fertility, with the exception (so far) of sub-Saharan Africa, is among the most important events in our world. One implication is that the population of Africa is forecast to be larger than that of all today’s high-income countries, plus China by 2060. Another is that familiar population pyramids, with the largest numbers at the youngest ages, are inverting. In South Korea, for example, males aged 50-54 are 4.3 per cent of the population, while those aged 0-4 are a mere 1.5 per cent of it. Similar inversions are occurring elsewhere, notably including China and even, albeit more slowly, in India.
Extremely low fertility is sure to create huge challenges. One is how to maintain pension or health systems as the population of working age shrinks sharply. One answer will indeed be much longer working lives. Another might be immigration. But the immigration needed to stabilise populations in low, let alone ultra-low, fertility societies would be enormous and, as such, surely politically and even practically impossible. Beyond these issues, there is the question whether a shortage of young people would inevitably starve an economy of the risk-taking on which progress has depended. At the same time, a shrinking population would in the long run help rebalance human demands with the carrying capacity of the planet and the health of the other species with which we share it.
Last but not least, what are relevant policies? The ability of societies to raise fertility rates is limited, particularly since they would need to influence the behaviour of well-educated and successful younger people, which is very hard to do. But societies do have an interest in children if they have one in their own future. Helping people have the children they want in ways that fit with their own plans should be a focus of policy. It is essential, in the modern world, to help parents, especially women, combine careers with children. It seems clear that many will not sacrifice the independence of the former for the burdens of the latter, however great the pleasures children might bring. More broadly, many policies must be reconsidered: in an ageing society, for example, there will be more households and so a need for far more housing.
These demographic shifts are profound. Whether we like them or not, they are transforming the world. And we must respond accordingly.
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