From Demographic Dividend to Demographic Drag: Fertility Decline and Long-Run Economic Performance

Åsa Hansson and Kristoffer Lundberg
Additional contact information
Åsa Hansson: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Kristoffer Lundberg: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden

No 391, Ratio Working Papers from The Ratio Institute

Abstract: Declining fertility is reshaping the demographic outlook of advanced economies, yet its long-run macroeconomic consequences remain poorly understood. Using a dynamic microsimulation model calibrated to the Swedish economy, this paper examines how alternative fertility and migration scenarios affect population dynamics, dependency ratios, GDP, GDP per capita, and economic growth between 2025 and 2100. We find that lower fertility initially raises GDP per capita through a temporary demographic dividend, but these gains are eventually offset by population ageing, a shrinking labor force, and slower economic growth. Under current fertility rates, GDP in 2100 is projected to be around 13 percent lower than under a stable demographic scenario, while lower fertility combined with lower migration reduces GDP to less than half that level. The findings highlight the importance of demographic structure for long-run economic prosperity and sustainable public finances.

Keywords: Fertility; demographic change; economic growth; welfare state; microsimulation (search for similar items in EconPapers)
JEL-codes: E24 H55 J11 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2026-08-10
New Economics Papers: this item is included in nep-eur
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cms.ratio.se/app/uploads/2026/08/from-demo ... hansson-lundberg.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ratioi:0391

Access Statistics for this paper

More papers in Ratio Working Papers from The Ratio Institute The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Daniel Halvarsson () and Dennis Jernkrook ().