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Why Declining Replacement Fertility Is Dangerous To The World Economy

Studies have confirmed a decline in what is called “replacement fertility” rate. This is not due to any reproductive problem faced by women. No! It is just that more women are choosing to have fewer children. This has led to decline in population in several countries especially in the Western world. Countries are beginning to foresee a challenge posed by decline in population size. Even China that once had a one-child policy is now in the process of legalizing a two-child policy.

What is the implication of this decline in population to the economy? You need to read this interesting piece by Joseph Chamie published on Yale Global for insight on how low fertility rate leads to shrinking workforce and increasing number of elder people in societies across the globe. This analysis is amazing.

Before reading the main article, you need to take a look at what Yale Global says about the declining human population in several countries. This is a good preamble for the main write-up;

Many countries in the world are undergoing demographic transition, with fertility rates below replacement level for more than 80 nations, about half of the world’s population. Women are choosing to have fewer children for many reasons related to financial and personal costs as well as uncertainty over good jobs and reliable social protections. Bleak projections warn of declines in populations, accompanied by smaller working-age populations and a larger proportion of elderly dependents. This problem is especially apparent in developed countries, and current immigration levels are not enough to offset the potential repercussions of a smaller working-age population and the economic costs of a larger elderly population. Too many governments ignore the challenge until confronted with costly government programs and a shrinking workforce. Fertility incentives are costly and deliver only modest impact. Demographer Joseph Chamie concludes, “Communities that refuse to adjust will only exacerbate the consequences of these powerful demographic trends.” – Yale Global

Replacement Fertility Declines Worldwide

The fertility rate, or the average number of births per woman, is typically of little concern for government and business leaders until it brings about population decline, shrinking the labor force and substantially increasing the proportion of elderly. Decline begins when fertility falls and remains below the replacement level of about two births per woman

A half-century ago six countries – Czechia, Estonia, Hungary, Japan, Latvia and Ukraine, 5 percent of the world’s population – reported fertility rates slightly below replacement level. Today a record high of 83 countries, representing about half of the world’s population, report below-replacement level rates. By 2050 more than 130 countries, or about two-thirds of the world’s population, are projected to have fertility rates below replacement level.

Many countries manage low fertility rates for decades. The fertility rates of Canada, Germany, Italy, Japan and the United Kingdom, for example, have been below replacement level for more than 40 years. Most European countries have remained below replacement for more than 25 years. Japan in 2017 had the fewest births since official statistics began in 1899.

Future rebounds in fertility cannot be ruled out, but once fertility falls below replacement level, the trend endures. This pattern has been especially evident in countries where fertility has declined to 1.6 children per woman, including Canada, China, Germany, Hungary, Italy, Japan, South Korea and Russia. Among the factors responsible for below-replacement fertility levels are lower child mortality rates, widespread education, increased urbanization, improvements in the status of women including increased employmentand economic independence, availability of modern contraceptives, delayed childbearing as well as the decline of marriage and pension systems and increased costs of childrearing. Available demographic evidence suggests these factors will persist and become widespread globally.

In many developed countries significant numbers of women remain childless. The percentage of childless woman aged 40 to 44 years in the United States, for example, doubled from 1976 to 2006, reaching over one-fifth of women. In 2010 no less than one-fifth of women aged 40 to 44 years were childless in Austria, Germany, Japan, Spain and the United Kingdom. Reasons for not having children vary, often encompassing personal, financial, political and environmental considerations.

Among women having children in developed countries, most have one or two children, with a smaller number choosing to have three or more. Countries with the lowest proportion of births after a second child in 2015 include Spain, 11 percent; Greece, 13 percent; and Italy, 14 percent. In most OECD countries, less than one fifth of births represent children beyond a woman’s second child. A notable exception to this pattern is the United States where 30 percent of births represent children beyond the replacement level.

Since the start of the 21st century, close to 20 countries have declined in population size and are aging rapidly due to low fertility levels. If current below-replacement fertility rates remain unchanged, populations of 40 countries, including China, Germany, Japan, Russia and South Korea, are projected to be smaller by mid-century. Even if fertility rates were to increase modestly, as assumed by a United Nations projection, the populations of those countries are still expected to be smaller by 2050.

More challenging for governments are projected declines in labor-force populations aged 20 to 64 years. Working-age population declines exceeding 20 percent are expected in many countries, including some of the world’s largest economies, such as China and Japan. Expected population declines are accompanied by rapid population aging.

As a result of below-replacement fertility and increased longevity, populations are becoming the oldest in human history. Increases in the proportion of elderly, those aged 65 years and older, are projected to be substantial and widespread. By mid-century, for example, the elderly are expected to account for more than a third of the populations of Germany, Italy, Japan and South Korea. The relative increase of the dependent older population has repercussions, especially regarding retirement ages, pensions, taxes, voting, health expenditures and elder care.

Some political leaders acknowledge the challenges. Paul Ryan, outgoing speaker of the US House of Representatives pointed to a need for higher US birthrates in this country: “baby boomers are retiring, and we have fewer people following them in the work force.” At the start of the year, Prime Minister Shinzo Abe labeled Japan’s dwindling birth rate alongside an aging society as a “national crisis.” Sultanka Petrova, deputy labor minister of Bulgaria, described the country’s projected decline in its working-age population as “a social and economic bomb that will explode unless we take adequate measures.”

Commenting more circumspectly, President Xi Jinping of China, which abandoned its one-child policy, said in his report to the 19th National Congress: “We will work to ensure that our childbirth policy meshes with related social and economic policies, and carry out research on the population development strategy.”

(Read complete article at Yale Global)

 

 

The Author

Chinenye Nwabueze

He is a Senior Lecturer in the Department of Mass Communication, Chukwuemeka Odumegwu Ojukwu University, COOU, (formerly Anambra State University), Igbariam Campus.

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