written by Ian Shin
Across the globe, birth rates are dropping rapidly. According to the Institute for Health Metrics and Evaluation, the global average fertility rate was 2.2 in 2021, and over half of all countries and territories were below the necessary replacement rate of 2.1 children per woman. For countries like South Korea, Taiwan, and Serbia the situation is particularly dire with each having a fertility rate well below 1.1 (Institute for Health Metrics and Evaluation, 2024). Why is this the case and what effects will this have on an already strained global economy?
Birth rates are a complex issue caused by a multitude of factors which economists across the globe are working hard to understand. While the exact causes are difficult to pin down, changing social norms definitely seems to be one of the leading causes. According to a 2023 survey of U.S. adults conducted by the Pew Research Center, most adults rank “enjoying work” higher than having children or getting married, and 42% said having children is not important to them at all (Parker, Minkin, 2023). In today’s world, people value children and having a family at a much lower rate. This is a stark contrast to the American baby boom and emphasis of the nuclear family found in the 1940s and 1960s.
The primary effect of decreased birth rates is aging populations. In 2023, the median age of Japan was 49 years old, and this number is only going to increase if fertility rates stay well below the replacement rate (UN Data Portal). Typically, a society has a steady flow of young workers joining the workforce who consistently replace older retirees. However, low birth rates mean a steep decrease in the number of young people and Japan is experiencing a decline in the size of the workforce. This increases the Japanese senior population, with less young people and tax income to support senior care. Less taxpayer dollars means less resources which can be used to provide healthcare, pensions, and other elderly care services. This puts a major strain on young laborers, the government budget, and healthcare service providers. In countries which are below the replacement rate, income taxes and the retirement age are likely to increase in order to compensate for an overall smaller working population.
While countries like Japan, Taiwan, and South Korea are already experiencing noticeable population declines, the U.S. and many countries in western Europe are not despite having below-replacement fertility rates. This is due to a constant and steady flow of immigrants, particularly from countries with high fertility rates. While immigration is mitigating the effects of falling birth rates in a few countries, it is not a viable long-term solution for a few reasons. Firstly, the birth rates of immigrant populations tend to adjust to local levels within three generations. While many first-generation immigrants may have three or more children, their kids and grandkids will have fewer children as each subsequent generation tends to have a higher standard of living than the previous. In order to maintain population levels with immigration alone, a country would need a constant influx of immigrants in the long-run. The highest fertility rates in the world can be found in poor and developing nations in sub-saharan Africa. While these countries produce many immigrants, the overall welfare and standard of living quality in these nations are also improving. Eventually, they will reach the same point of urbanization and modernization as developed countries like Japan, Taiwan, and the United States, and they too will inevitably reach the same issue of population decline.
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What solutions have governments tried?
Multiple countries that are facing population decline have adopted pro-family policies, often including paid parental leave, publicly supported child care, or a combination thereof. For example, in 2009 the Taiwanese government began offering six months of paid parental leave with a reimbursement rate of 60 percent of a new parent’s salary. The government has introduced tax breaks for parents of young children, invested in child care centers, and has even tried hosting several singles mixers in an effort to get young people to pair up (North, 2023). Furthemore, in 2013 Germany passed a law declaring that every child over the age of 1 has the legal right to daycare access. In 2017 they took this a step further by allowing parents to sue for lost wages if they can’t find a place for their child in a public daycare center (Collins, 2017). Other countries have even implemented direct-payment programs to encourage child-rearing. In 2007, Russia began offering a one-time sum of about $7,000 to families with more than two children (Walker, 2020). However, none of these policies have yet to make a significant impact anywhere. Experts argue the main reason for this is the importance of social values and norms in deciding to have children. Deciding to have kids is a deeply personal decision that is not easily swayed by government policies, or even monetary incentives.
References
Institute for Health Metrics and Evaluation. (2024, March 20). The Lancet: Dramatic declines in global fertility rates set to transform global population patterns by 2100 | Institute for Health Metrics and Evaluation. Www.healthdata.org. https://www.healthdata.org/news-events/newsroom/news-releases/lancet-dramatic-declines-global-fertility-rates-set-transform
Greenwood, S. (2023, September 14). 5. What makes for a fulfilling life? Pew Research Center’s Social & Demographic Trends Project. https://www.pewresearch.org/social-trends/2023/09/14/what-makes-for-a-fulfilling-life/
(n.d.). Median age of population. United Nations Data Portal; United Nations. Retrieved November 12, 2024, from https://population.un.org/dataportal/data/indicators/67/locations/392/start/1990/end/2023/table/pivotbylocation?df=89a7bf75-50b3-48ee-a906-2a51d72b5714
North, A. (2023, November 27). You can’t even pay people to have more kids. Vox. https://www.vox.com/23971366/declining-birth-rate-fertility-babies-children
Collins, C. (2017, January 10). In Germany, Parents Can Sue the Government for Failing to Provide Child Care. The Atlantic; The Atlantic. https://www.theatlantic.com/business/archive/2017/01/german-childcare/512612/
Walker, S. (2020, March 4). “Baby machines”: eastern Europe’s answer to depopulation. The Guardian. https://www.theguardian.com/world/2020/mar/04/baby-bonuses-fit-the-nationalist-agenda-but-do-they-work