Low fertility may persist and could be good for the economy

Subjects

Fertility well below the replacement level of 2.1 is increasingly common in high-income countries, and this trend is often discussed as a source of concern. Here, we argue that persistently low fertility is not only likely but, under plausible economic and demographic conditions, may also be socially and economically advantageous. The demographic transition describes how populations move from initially high mortality and fertility to low and controlled levels of both. As mortality typically declines first, this process initially leads to population growth, which ends when fertility falls to very low levels. Beginning in nineteenth-century France, the transition is now well advanced around the globe, although sub-Saharan Africa lags behind. Originally, it was expected that at the end of the transition life-expectancy gains would level off and fertility would stabilize around the replacement level of 2.1 children per woman, and result in long-term population stability in the absence of migration¹. This assumption also underpinned UN population projections for many decades.

Empirical evidence, however, shows that fertility declines did not stop at the replacement level. After an interruption in the West during the baby boom of the 1960s, fertility resumed its decline and has reached unprecedentedly low levels across much of the developed world. Rates at or below 1.3 (also termed ‘lowest-low fertility’²) were long viewed as temporary overshooting that would reverse with further development as gender equity improves and social development continues³. Based on the cross-sectional relationship between the total fertility rate (TFR) and the Human Development Index (HDI) around the year 2005, Myrskylä et al.³ showed that the negative association at lower levels of HDI seems to turn positive beyond a threshold HDI of approximately 0.86.

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