The Cost of Low Fertility in Europe

David Bloom, David Canning, Günther Fink and Jocelyn Finlay ()

No 14820, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the effect of fertility on income per capita with a particular focus on the experience of Europe. For European countries with below-replacement fertility, the cost of continued low fertility will only be observed in the long run. We show that in the short run, a fall in the fertility rate will lower the youth dependency ratio and increase the working-age share, thus raising income per capita. In the long run, however, the burden of old-age dependency dominates the youth dependency decline, and continued low fertility will lead to small working-age shares in the absence of large migration inflows. We show that the currently very high working-age shares generated by the recent declines in fertility and migration inflows are not sustainable, and that significant drops in the relative size of the working-age population should be expected. Without substantial adjustments in labor force participation or migration policies, the potential negative repercussions on the European economy are large.

JEL-codes: J13 J21 O52 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-age and nep-eec
Note: AG
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Citations: View citations in EconPapers (12)

Published as European Journal of Population / Revue européenne de Démographie May 2010, Volume 26, Issue 2, pp 141-158 The Cost of Low Fertility in Europe David E. Bloom, David Canning, Günther Fink, Jocelyn E. Finlay

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Journal Article: The Cost of Low Fertility in Europe (2010)
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