Replacement Fertility Declines Worldwide

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

Communities must prepare for below-replacement fertility levels, accompanied by shrinking workforces and increasing numbers of elderly
Joseph Chamie
Thursday, July 12, 2018

Falling population, dropping support: A sharp drop in population is reported for Ukraine, and the United States is among the nations with low public spending for family benefits
Falling population, dropping support: A sharp drop in population is reported for Ukraine, and the United States is among the nations with low public spending for family benefits

NEW YORK: 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.

Source: UN Population Division

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 employment and 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.

Graph showing ongoing percent delcine in fertility and a decline in labor force participation
Enduring trend: The bigger challenge with population decline for nations, if the current below-replacement fertility rates remain unchanged, is the decrease in labor-force participation and people aged 20 to 64 (Source: United Nations Population Division)

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.”

Family values: The percent of public spending on family benefits like child care varies between near zero to near 4 percent, with the caveat that higher percentages do not ensure efficiency (Source:  OECD)

Nearly two out of three countries with below-replacement fertility have policies and programs to raise birthrates. In addition to public programs promoting marriage, childbearing, parenting and gender equality, governments try various incentives to raise fertility rates including baby bonuses, family allowances, maternal and paternal leave, tax breaks, flexible employment schedules and family-friendly work environments. Costs of those incentives can be substantial. While in some countries such as Mexico and the United States public spending on family benefits is well below 1 percent of GDP, in other countries, including Denmark, France, Sweden and the United Kingdom, family benefits amount to 3 to 4 percent of GDP. Some European countries, including France, reduce their comparatively generous family benefits to scale back budgets.

Pronatalist incentives may encourage some couples to have additional children or start families earlier than planned. Such measures by and large tend to be costly, the impact modest at best, and insufficient at increasing fertility rates above replacement levels. Powerful forces overwhelm pronatalist policies, especially economic uncertainty related to automation and the decline of good jobs and the high costs of having children.

Some governments rely on selective immigration to maintain the size of their workforce and slow the pace of population aging. However, a United Nations study concluded that current immigration levels cannot offset expected demographic declines and population aging for most countries with below-replacement fertility rates. Countries worldwide increasingly aim to reduce immigration levels and stem record flows of refugees by erecting fences and barriers, strengthening border controls, tightening asylum policies and restricting citizenship. Attempts by regional and international organizations to encourage acceptance of immigrants and growing numbers of refugees encounter fierce political resistance, public opposition and nativistic policies.

To confront decades of below-replacement fertility, governments must adjust to demographic and economic realities rather than simply promote political wishful thinkingabout increasing family sizes, as Viktor Orbán did in May when he blamed diversity and illiberal democracy for shrinking families and a fertility rate of 1.4 children per woman. A significant boost in fertility levels is unlikely, at least for the foreseeable future.

Certainly, below-replacement fertility resulting in smaller populations can lead to benefits including conservation of natural resources, enhanced educational opportunities, higher labor force participation rates, and in some instances higher standards of living. At the same time, however, the expected demographic changes for low-fertility countries pose challenges for economic growth, retirement, social security and health-care systems.

Despite more countries facing population decline and rapid population aging, world population continues to increase, likely reaching 8 billion by 2023, 9 billion by 2037 and 10 billion by 2055. This growth is largely due to the high rates of demographic growth in sub-Saharan African countries, where fertility levels are generally in excess of five births per woman. While the populations of 40 low-fertility countries are projected to be smaller by mid-century, some 25 high-fertility countries, nearly all in Africa, are expected to see their populations more than double by 2050.

For most countries, sustained below-replacement fertility rates promise population decline. Communities that refuse to adjust will only exacerbate the consequences of these powerful demographic trends.

Joseph Chamie is an independent consulting demographer and a former director of the United Nations Population Division.

© 2018 YaleGlobal and the MacMillan Center

Comments

That 2050 figure is over-optimistic.
Please note that we are currently adding 85+ million a year and that figure is rising !
Eric

Perhaps this was written cleverly and diplomatically so as not to ruffle too many feathers among overshoot deniers. Maybe this is the best way to bring them around - not necessarily to embracing population decline, but at least to stop fighting it. Still, from someone so knowledgeable as Chamie, as I read I kept looking for the acknowledgment that while there are challenges associated with contracting population, the fact is that continued growth of human population will lead to severe crises and possibly collapse of human civilization. This warrants more than a mere mention near the end as a "conservation of natural resources" benefit. Avoiding catastrophe is a benefit that trumps all the challenges, so we should embrace, celebrate and pursue population contraction in all parts of the world. We are a LONG way from the day we might need to worry that we're procreating too little to preserve our species. We are much closer to procreating too much for our species to survive.

Dave Gardner
Host of the GrowthBusters Podcast
Director of the Documentary, GrowthBusters: Hooked on Growth
www.growthbusters.org

It's so sad to read such an eminent demographer repeating the fallacies of ageing catastrophists - while neglecting the rapidly escalating environmental strains of population growth. Working age proportion does not equal workforce. Chamie even mentions that ageing might lead to higher workforce participation, but fails to acknowledge that this makes the whole 'working age proportion' fixation a rouse. Among OECD countries, there is no relationship between extent of ageing and proportion of people employed. Nor has any country seen a demonstrable decline in workforce due to ageing: it has not reduced employment, but UNemployment. Nor is ageing going to continue apace until there is insufficient supply of potential workers - it is a self-limiting process. That economic models persistently treat age-specific workforce participation as a given, not impacted by choice of demographic scenario, is quite against their own theories of market forces. They are all rubbish, and should be called out as such by demographers.
Beyond that, it is irresponsible to suggest that boosting births or immigration can lessen the burden of ageing, at anything like the scale at which they increase the burden of population growth. The infrastructure costs alone dwarf any diminution of pension bill, even if we assume that the future retirees in a shrinking population and those in a rapidly-growing population will have had equal chance of saving for retirement, despite the latter having lower wages, more unemployment, higher mortgages and more government austerity due to infrastructure bills. Assuming they can maintain food and energy security, and successfully avoid a climate catastrophe. In what inventory of humanity's challenges does ageing even rate a footnote?

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