Are there enough babies? A Penn economics professor says no.
Demographers and statisticians are debating this question at an increasingly fevered pitch: Is the world’s population destined to grow for the rest of time, or could it instead begin to shrink? Penn economics professor Jesús Fernández-Villaverde has a decisive view, which he puts in blunt terms. “If you’re 55 years or younger,” he predicts, “you are likely to witness something no human has observed for around 60,000 years, not even during wars or pandemics: a systematic decrease in the world population.”
There are inherent challenges in assessing global population trends, largely due to imperfect data: some regions of the world generate more reliable statistics than others. This means that Fernández-Villaverde, who collaborates with a multitude of organizations in the US and abroad (on research topics ranging from the fast-evolving world of artificial intelligence to the intricacies of monetary policy), occasionally disagrees with prominent international bodies, such as the United Nations, that estimate that humanity is still reproducing above the so-called replacement rate. While he concedes that demographic data can be fragile, his analysis of trends in more than 180 countries suggests that in many places, UN estimates of fertility rates are probably too high.
His calculations are particularly striking because they suggest that a crucial moment has arrived: the global fertility rate, he says, may have already dipped below the replacement rate, as more and more couples around the world have decided to have fewer children or forego parenthood altogether. Although he allows that the global population is still growing, he expects it to peak in roughly 30 years, with a steep decline unfolding in its wake. And when the transition comes—when the world’s population eventually tips into contraction—he believes the impacts will be disruptive and swift.
According to his research, the stage is quickly being set. He has found, for instance, that dramatic declines in childbirths are evident in virtually every region of the world and have taken hold across rich, poor, and middle-income countries alike. “Fertility has dropped much faster than anyone anticipated,” he says, pointing to South Korea as a telling, if admittedly extreme, case. In 2023, the nation’s fertility rate fell to roughly one-third of its replacement rate. As recently as 2015, Korean fertility was nearly double its 2023 levels.
Korea’s case is by no means isolated. Fernández-Villaverde has amassed a startling list of places where fertility has declined precipitously. China, India, Brazil, Mexico, Japan, Vietnam, Iran, Thailand, and South Korea are on the list. So are Argentina, Colombia, Canada, the US, all of Europe, and parts of Africa.
Fertility levels are influenced by many factors, making it difficult to single out a dominant reason behind their descent. Fernández-Villaverde believes that shifting social norms are responsible for the fact that many young people do not view parenthood as something that can fit comfortably into their lives. If they have children at all, they are having fewer of them, a shift visible even in societies that typically embrace larger families. A particularly instructive set of circumstances recently played out in China, whose government lifted restrictions on birth rates in 2016. It would have been reasonable to expect a substantial uptick in birth rates in subsequent years, but after a short-lived bump, the country’s fertility rate fell below levels seen while the restrictions existed. As Fernández-Villaverde has documented, the results in China are part of a global decline in the appeal of parenting. “Raising children is no longer a priority for many young people,” he says, “either in the more traditional societies of eastern Asia or the more progressive countries of northern Europe.”
Fernández-Villaverde points out how the so-called peer effect, which influences social norms, can build on itself, putting pressure on fertility rates: If your four closest friends decide not to have children, he says, “there is a good chance you’ll follow suit.”
The peer effect seems to apply on an international scale as well. In a 2021 research paper titled “Demographic Transitions Across Time and Space,” Fernández-Villaverde and coauthors Matthew J. Delventhal and Nezih Guner observed that “demographic transitions are contagious: an important predictor of a country’s transition is the prior transition of other countries that are close to it geographically or culturally.”
With the peer effect as a starting point, the investigation considered a variety of other potential demographic drivers. The authors used economic modeling to examine how parents are apt to address a tradeoff between how many children to have and how much schooling to pursue for them given the cost of education. Fernández-Villaverde’s model revealed a strong relationship between declining fertility rates and rising educational attainment.
While a shrinking population poses big existential questions—with no playbook for addressing them—the practical implications are equally daunting. Will universities face enrollment downturns? Will the labor force have a sufficient inflow of younger workers? Given the weighty problems society will face, Fernández-Villaverde suggests that successful policy prescriptions will need heft as well, noting that marginal changes will likely be insufficient.
Take housing costs, for instance. In many parts of the world, especially in urban areas, real estate prices are high enough to discourage people from having children. Until affordable housing becomes a priority in these places, childrearing will remain a challenging proposition. Or consider extended parental leave and child tax credits, which Fernández-Villaverde notes have been introduced or expanded in various countries, from France to South Korea, but “have shown limited success” in moving the needle.
Fernández-Villaverde takes a kaleidoscopic approach to what he foresees as “the coming demographic winter,” arguing that “what we’re facing isn’t an orderly decline in the number of humans—it’s a population collapse.” Amid the ambiguities and uncertainties that researchers are grappling with, Fernández-Villaverde aims to provide evidence-based tools that can guide policymakers. The time for action is already here, he believes, and he hopes his research can lead to good decisions about the next steps.
“No [single] policy is guaranteed to work,” he says, “but we should experiment, because it’s essential to create conditions for large families to flourish. Otherwise, the consequences could be harsh—more so than people might expect.”
—Andrew Carr
Dear Editor:
As a lifelong exploration geologist and a person very concerned about the future of our Earth, I can only reply to Prof. Fernández-Villaverde that his “demographic winter” cannot come soon enough. I am 83 years old, and have lived through the consumption of 98% of the oil, 99% of the natural gas, and even 80% of the coal ever produced. These are the energy sources on which our civilization depends: if they should become scarce, the damage to the world economy and our lives would be immediate and severe: it would probably include widespread starvation as mechanized agriculture collapsed and major warfare as countries competed for the remaining resources. The production of these resources has entailed untold damage to large areas of land, to the oceans , and to the atmosphere. We are also discovering that the waste that we have produced in using them is also damaging the health of the planet and many of the living things that it supports, leading to the “sixth major extinction event’.
Economists tend to believe that we need continued 2%-3% growth in GDP to maintain living standards and political stability: this rate means that by the time Prof. Fernández-Villaverde’s 55-year-old people reach my age, the rate of use of all resources will have doubled again. The growth in resource exploitation that we have seen over the last 200 years has been sustained only by extending our ability to explore and produce minerals from ever more inaccessible and hostile environments: we have run out of this kind of running room. Now we are having to employ more and more expensive and environmentally damaging techniques, such as fracking and distillation of oil from tar sands, to maintain production levels. This is a sign that we are nearing the end of our ability to keep growing production exponentially at a price that society can afford.
In my opinion a predictable and managed response to a sharp population decline will be far preferable to the mayhem that will result from resource depletion. Many ecologists estimate that the carrying capacity of the Earth is about 2-3 billion people: the sooner that we can get population down to that level without immense suffering the better.