How Declining Birth Rates Hurt Global Economies

Around the world, there are more aging people and fewer young people to take care of them. A new study about the trend suggests this demographic shift could drag down the global economy. The report is called "The Sustainable Demographic Dividend." Co-author Phillip Longman, a senior research fellow with the New America Foundation, talks to Lynn Neary about the study.

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LYNN NEARY, host: The U.S. population is aging at the same time the fertility rate is dropping. This demographic shift is happening in countries around the world, and a new study about the trend suggests it could drag down the global economy. The report is called the Sustainable Demographic Dividend. Phillip Longman co-authored the study. He's a senior research fellow with the New America Foundation.

PHILLIP LONGMAN: The first order effect of a decline in the birthrate tends to be positive for the economy. A society finds it has fewer children to raise and educate. That tends to free up a lot of female labor to join the formal economy. But with the next turn of the screw, things change. As fertility rates remain below replacement levels, you still have fewer children but now your workforce is beginning to decline and you've got more and more seniors as a percentage of your population. And so around the world today we see many countries struggling with their fiscal situation largely because of the exploding cost of pensions and the relatively slow growth of their labor forces.

NEARY: Are there other economic consequences as well to this trend?

LONGMAN: Well, around the world we tend to find that entrepreneurialism, for example, is highly concentrated among young people. Most new companies are formed by people in their late 20s, their early 30s. And so there's a danger of societies losing their dynamism, culturally, economically, technologically, when they age.

NEARY: So, what is the solution? Certainly it's not just go back to have large families, is it?

LONGMAN: Right. Well, we find in much of the developing world people who say they wish they could have children but they can't find a way because it's seen as too expensive. So in some ways this is almost a human rights problem. In other places, you know, we still, to be clear, are looking at very rapid population growth that creates pressures of its own. But what's new is that most of the remaining population growth, for the globe as a whole, is coming from people who've already been born. So obviously that's a great challenge. And if you're a developing country that is not yet rich and now you're growing old before you get rich, this is a particular challenge.

NEARY: How aware are individual countries of this problem and the effect it's going to have on them in the very near future? And is there any nation in particular that's dealing with the situation well?

LONGMAN: I would say almost certainly in every developed country outside of the United States, this is a top-of-mind issue. You know, we have governments like Singapore that are sponsoring speed dating events in hopes of getting up the birthrates, right. The United States, because it has high - or has had - this high immigration rate, and a relatively high birthrate, has not yet really felt the effects. The big question going forward is whether the United States is going to find itself in the same position as literally every other developed country in the world today.

NEARY: Thanks a lot for being with us, Phillip.

LONGMAN: Thank you.

NEARY: Phillip Longman is a senior research fellow at the New America Foundation.

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