The truth about population decline
Arguments about the dangers of falling fertility deserve much closer scrutiny
Martin Wolf
© James FergusonIn The Population Bomb, published in 1968, Paul and Anne Ehrlich notoriously forecast that humanity confronted an imminent danger of mass starvation.
This threat, they argued, came from the explosion in population.
Today, however, people like US vice-president JD Vance worry about a shortage of people, as fertility rates plunge below the replacement rate.
The Ehrlichs were mistaken about those looming famines.
Is it possible that alarmists on the other side are wrong, too?
Yes.
People can get hysterical about babies.
Why not relax and enjoy them instead?
The respected Our World in Data estimates global population at just 5mn 12,000 years ago, 230mn in the year zero, 1bn in 1800, 3bn in 1960 and 8bn today.
As for the future, the UN forecasts a global population of 10.2bn in 2100.
The world is clearly not running out of people.
What then is the problem?
The answer, as I noted last week, is that in many countries, fertility is now below — and in some, such as China, far below — replacement.
Of the major regions of the world, the exceptions are south Asia and Africa.
In general, the more prosperous the place or the people, the fewer the births.
This is not just true across countries.
Within India, the state of Tamil Nadu has the eighth highest GDP per head and a fertility rate of 1.8, while Bihar, with the 34th highest GDP per head, has a fertility rate of 3.
Again, graduate women tend to have fewer children than non-graduates.
Prosperity is the most powerful contraceptive of all.
The explanation I addressed last week was the transformation in the role of women.
But even that is part of a broader set of changes.
Two others — urbanisation and mass education — also matter.
The former moves people to places where land is relatively expensive.
The latter transforms children from productive assets in the quite short term into costly long-term investments.
Grown children may also now move far away from their parents.
Modernity also creates capital markets, pensions and welfare states, all of which are a substitute for children’s financial support.
Finally, it creates new pleasures, which compete with those of having children.
We can see the effects of all these changes in the fertility data.
No, argues the British economist Lord Adair Turner.
A favourite argument why the declining fertility rates are potentially catastrophic is that “dependency ratios” will soar.
Measured in the normal way, as ratios of people over 65 to those aged 15-64, this is true.
But this ignores the fall in the proportion of the young, many of whom are now dependent until their twenties.
Overall dependency ratios will rise far less, except in the more extreme cases of low fertility.
It also ignores the potential for people to work longer.
In South Korea, 38 per cent of people over 65 were working in 2024, against a ludicrous 4 per cent in France.
Furthermore, adds Turner, rising productivity, possibly accelerated by artificial intelligence, offers a way out.
Note that people work far fewer hours than they did two centuries ago, because they are so vastly more productive than they used to be in, say, 1800.
Thus, notes Turner, the share of available hours spent working after the age of 15 in high-income countries has fallen by at least 60 per cent since then.
But real output per head has increased 15-fold.
If this continues, as is likely, a modest increase in the dependency ratio would be extremely manageable.
Some also argue that there will be “too few innovators”.
Nonsense!
The global population is not even set to fall before 2100.
Moreover, we now have a far better educated labour force, the inclusion of women and the gains from AI.
Moreover, radical innovation has always been driven by the few.
Not least, today’s population is a multiple of what it was a century or two ago, when innovation was doing just fine.
What matters far more is providing the environment for innovation, not least support for science.
Again, there has been much chatter about the “demographic dividends” that supposedly come from youthful populations.
In fact, notes Turner, “there is no evidence that economies with sustained high fertility rates grow faster.
On the contrary, persistently high fertility often leads to a demographic disaster of sluggish income growth and widespread unemployment.”
India is a sobering example.
World Bank data shows that over the past two decades, the working-age population has risen from 700mn to 1bn.
But, according to Azim Premji University’s “State of Working India 2023”, only 490mn count as part of the workforce.
Of these, says Turner, just 113mn earn a regular wage outside agriculture, and barely 60mn are employed in the “organised sector”, where companies actually deploy cutting-edge technologies.
India’s swelling population has, alas, created a sea of chronic underemployment around an island of prosperity.
In much of Africa, this situation is worse.
Finally, growing populations impose costs — not just the global environmental ones, but local ones as well.
These include the soaring prices of urban land and so of housing in many countries (themselves an explanation for low birth rates).
Indeed, the competition for intrinsically scarce “positional goods” is exacerbated by rising populations and so would be ameliorated by the reverse.
The conclusion then is that there is no powerful reason to fear declining populations.
The sort of collapse heralded by fertility rates below one would indeed be problematic.
But a fertility rate of 1.5 or above should be perfectly workable, with a little sensible forethought.
What might need to be done to achieve that?
I hope to address that question soon.
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