ABIRTH ANNOUNCEMENT come on, that was capital. On November 24, the Indian government said the country’s fertility rate had fallen to 2.0 children per woman. That’s below the replacement rate – at which new births are enough to maintain a stable population – and puts India in the company of many richer economies. In fact, fertility rates are now lower than the replacement level in the four ” BRIC”(Brazil, Russia, India and China), with populations probably declining in Russia and China. Not surprisingly, emerging economies are following a demographic trajectory similar to that followed by rich economies before them. But the pace of change appears to be accelerating, with potentially far-reaching implications for the global economy.
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What sociologists call the “demographic transition” has long been an essential feature of economic modernization. In pre-industrial societies, birth and death rates (annual births and deaths per 1,000 people) were very high, and overall population growth was uneven and slow. But in the 18th century, death rates in parts of northwestern Europe began to decline, marking the first stage of a seismic demographic shift. Declining death rates have led to rapid population growth; Britain’s population roughly doubled between 1760 and 1830. Yet from the end of the 18th century, fertility rates also began to decline. In the 20th century, birth and death rates in rich countries stabilized at low levels, resulting in slow or even negative population growth in the absence of immigration.
Transitions are complex social phenomena. The decline in death rates is easier to explain, as it is the product of improved nutrition, medicine and public health. Falling birth rates are partly a response to economic incentives. As the return to skills increases, for example, families appear to have fewer children in order to invest more in the education of each child. But culture matters too. In a recent article, Enrico Spolaore of Tufts University and Romain Wacziarg of the University of California at Los Angeles, note that in Europe, new fertility standards appeared in France at the end of the 18th century and the beginning of the 19th century. century. The fashion for fewer births is probably rooted both in the changes in mentality linked to secularism and the Enlightenment and in the dissemination of information on family planning. As birth rates declined across Europe, they did so faster and earlier in places with linguistic and cultural ties to France.
Demographic transitions today follow quite similar patterns, according to Matthew Delventhal of Claremont McKenna College, Jesús Fernández-Villaverde of the University of Pennsylvania and Nezih Guner of the Universitat Autònoma de Barcelona, in another new article. The authors collate data from 186 countries and find that all but 11 have experienced a transition to lower and more stable death rates, well below pre-industrial norms. A host of around 70 countries began their transition to low fertility rates between 1960 and 1990. Only one country, Chad, has yet to begin a fertility transition. (In 80 countries, the evolution of mortality and fertility towards modern low levels is now complete.)
It is important to note that the rate at which countries are undergoing demographic transition appears to have accelerated. While Britain’s transition went smoothly between the 1790s and the 1950s, that of Chile proceeded more rapidly between the 1920s and the 1970s, and those that began towards the end of the 20th century. only took a few decades. This acceleration seems at least in part to reflect what the authors call “demographic contagion,” or the fact that transitions are occurring ever faster where geographically and culturally close places have already undergone a change in fertility. This proximity effect can also mean that transitions are now starting at lower income levels. While fertility transitions over the past two centuries have tended to start GDP per person of about $ 2,700 (in purchasing power parity and 2011 prices), those started since 1990 have occurred at an income level of about $ 1,500.
The result of this rush for demographic transition is a steady decline in global fertility and population growth. The global fertility rate, which stood at 3.5 births per woman in the mid-1980s, fell to just 2.4 in 2019. Indeed, it is possible, given the observed declines in births across countries. wealthy during the pandemic, that covid-19 pushed the world at large towards a replacement fertility rate, if only temporarily. The world population will continue to grow even after this level is reached, due to the large number of people who are or are approaching the age of raising children. India’s population, for example, is still expected to reach around 1.6 billion by mid-century. But this is a lower peak (by about 100 million people) reached earlier (by about a decade) than expected. Likewise, the rapid decline in global fertility may mean that the projections of the UN, which show that the world population will reach 11 billion by 2100, will eventually have to be revised downwards.
The overall completion of the demographic transition will not be without challenges. This can complicate long-term macroeconomic issues, for example, as recent work suggests by Adrien Auclert and Frédéric Martenet from Stanford University, Hannes Malmberg from the University of Minnesota, and Matthew Rognlie from Northwestern University. They note that the increase in savings due to an aging population lowers inflation and interest rates. As the share of the world’s population over 50 rises from 25% today to 40% in 2100, low interest rates may set in more, asset returns may fall, and global imbalances may widen .
Yet demographic transitions could also bring a range of economic benefits. Slower population growth could make the challenge of reducing carbon emissions less daunting. And the potential of fewer workers could be better exploited, through better education and greater participation of women in the labor market. The arrival of immigrants, once seen as a threat, could even become as important an occasion as a birth in the family. ■
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This article appeared in the Finance and Economics section of the print edition under the title “Family Matters”