The High Cost of Low Fertility in Europe

David Bloom, David Canning, Günther Fink and Jocelyn Finlay ()
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Jocelyn Finlay: Harvard School of Public Health

PGDA Working Papers from Program on the Global Demography of Aging

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 high 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 immigration inflows. To illustrate these effects we construct a population accounting model and simulate steady-state outcomes. Regression analysis indicates the differing marginal effects of long-term fertility change in Europe versus the rest of the world.

Keywords: demography; growth; age structure; population; economy. (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-age and nep-eec
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