Terra Incognita: The Economics of a Shrinking World

Jesus Fernandez-Villaverde and Patrick Norrick

No 35809, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: As of 2026, humanity is likely below replacement fertility. That has never happened before, not in wars or pandemics. But the real surprise is that the fall has been concentrated in low- and middle-income countries and among poorer and less educated women. We fit a single-factor model to 236 countries since 1950: the common component peaked in 1978, and what drives fertility down today are country-specific trends, 219 of them negative and not one leveling off. None of the commonly cited mechanisms can account for this pattern, so we offer a conjecture: modernity itself, which makes a third child expensive and childlessness cheap. Children come in integers, so it takes very little to move a cohort’s fertility rate from 1.8 to 1.3. And nothing in an economy pushes fertility back to 2.1. We close with the main economic consequences, in particular slow growth.

JEL-codes: E11 J11 J13 O24 O40 (search for similar items in EconPapers)
Date: 2026-09
Note: EFG
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Working Paper: Terra Incognita: The Economics of a Shrinking World (2026)
Working Paper: Terra Incognita: The Economics of a Shrinking World (2026)
Working Paper: Terra Incognita: The Economics of a Shrinking World (2026)
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