Low birth rates can actually pay off in the US and other countries, study shows

October 9, 2014, University of California - Berkeley
Credit: CDC.gov

As birth rates decline in countries that include parts of Europe and East Asia, threatening the economic slowdown associated with aging populations, a global study from the University of California, Berkeley, and the East-West Center in Hawaii suggests that in much of the world, it actually pays to have fewer children. The results challenge previous assumptions about population growth.

Researchers in 40 countries correlated birth rates with economic data and concluded that a moderately low birth rate – a little below two per woman – can actually boost a country's overall standard of living. While governments generally favor higher birth rates to maintain the workforce and tax base needed to fund pensions, health care and other benefits for the elderly, it is typically families that bear the brunt of the cost of having children, the study found.

"Higher fertility imposes large costs on families because it is they, rather than governments, that bear most of the costs of raising children. Also, a growing labor force has to be provided with costly capital such as factories, office buildings, transportation and housing," said UC Berkeley demographer Ronald Lee, an author of the far-reaching study to be published Oct. 10 in the journal, Science.

"Instead of trying to get people to have more children, governments should adjust their policies to accommodate inevitable population aging," added Lee, who co-authored the report, "Is low fertility really a problem? Population aging, dependency, and consumption," with Andrew Mason, an economist and senior fellow at the East-West Center.

Lee, Mason and fellow researchers compared government and private spending among all age groups using the National Transfer Accounts project, which studies how population changes impact economies across generations, and which they co-direct.

Their calculations were based on finding the birth rate and age distribution that would best balance the costs of raising children and of caring for the elderly. For example, they found that the U.S. is close to ideal for government budgetary needs, but that in parts of Europe and East Asia, average fertility rates are so low that they reduce living standards when public and private costs are included.

"A more complete accounting of the costs of children shows only a few countries in East Asia and Europe where the governments should encourage people to have more children," said Mason, an economics professor at the University of Hawaii-Manoa. "In the United States and many other high- and middle-income countries, people are having about the number of kids that are best for overall standards of living."

Explore further: Old age futures a concern in many countries

More information: "Is low fertility really a problem? Population aging, dependency, and consumption," by R. Lee et al. Science, 2014. www.sciencemag.org/lookup/doi/ … 1126/science.1250542

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2.7 / 5 (3) Oct 10, 2014
"Instead of trying to get people to have more children, governments should adjust their policies to accommodate inevitable population aging," added Lee, who co-authored the report, "Is low fertility really a problem?

This issue wouldn't be a major problem except that the productivity of the typical worker is not rising at the same rate as the population is falling. Add to that, the inevitable lower demand for goods and services as the population ages and shrinks --and I don't see how this works.

In fact, look at any country with a shrinking population, and the vast majority of them are also dealing with a very poor economy.
1.8 / 5 (5) Oct 10, 2014
Govt sponsored Ponzi schemes like Social Security and welfare need wealth creators from whom the govt can plunder.
1 / 5 (5) Oct 10, 2014
But it isn't governments that spends money on building factories and buildings..... oh wait I forgot we no longer live in a democratic capitalistic society .... idiots, criminals, illegal aliens, dead people who voted (often multiple times in the same election) for democrats has transformed the USA into a socialistic elitist country, where part time jobs now are the norm, rich elitist billionaires rule, and rules are only for conservatives.
2.2 / 5 (5) Oct 10, 2014
A simple minded and obviously limited study that only examined people costs - not related and interconnected economics. The other side of the equation not considered in this study is income - not only for the people, but the businesses that serve them and the governments that parasitize them for the greater good. There has never been, and currently no economist has even imagined a viable shrinking market based economy. To date human economics has consisted only of repeating periods growth and collapse. We have never experienced in a positive way - extended periods of stagnation, or negative growth. The only difference this time is that the collapse will be measured in billions of people instead of a few millions - and given the depletion rates of our two most sensitive primary resources - peak petroleum (both energy and food production dependencies) and peak phosphates (one of the petroluem industry dependencies) - economic recovery will be far more problematic.
2 / 5 (4) Oct 10, 2014
It's always refreshing when assumptions are challenged. Warning bells have been going off about the population explosion for decades. One might think that once it reverses there would be a sign of relief.

My guess is that as long as businesses are aware that population is decreasing they will find a way to be profitable in that environment.

And given that robots will be ubiquitous to provide manufacturing. And that new fuel production will come on line as technology improves exploration techniques. And that renewables are growing at a breakneck speed (and check recent advances in tapping the zero point field and even (maybe) cold fusion)...I think the economy will be fine.
1 / 5 (4) Oct 10, 2014
.I think the economy will be fine.

Not a socialist one like we now have in most of the world.
5 / 5 (1) Oct 13, 2014
. . . democratic capitalistic . . .

A curious concatenation. Kind of like "amorous psychopath", "doting pederast", "comestible feces".

Albeit not perfect, if you live in the U.S., you do live in a democratic society. Too bad a whole lot of people there democratically don't agree with you and will never embrace your extreme views. You will, of course, rationalize that in some way that doesn't suggest your being at fault. Wrong. Suck it.

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