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The potential impact of falling fertility rates on the economy and culture

Fertility rates are important for economic growth, cultural stability and more. The question is when they become problematic — and experts don't always agree on that.
Lois M. Collins, Deseret News Modified: May 21, 2014 at 5:47 pm •  Published: May 23, 2014

Much of the world — especially most developed countries — have fallen below the "replacement" fertility rate, but whether this is cause for celebration or concern is the subject of debate.

Fertility rates, whether high or low, impact economic growth, cultural stability and more. The question is at what stage of either decline or growth they become problematic — and experts don't always agree.

The total fertility rate — the number of babies women average over the course of their lives — can be expressed for local, state, regional, even global populations. America's total fertility rate is around 1.9 babies per woman, a historic low but near the replacement rate of 2.1. Women need to average two babies for the population size to be stable. If the current rate dropped and immigration to the United States stopped, the country would experience population decline.

Some parts of the world are far below 2.1 and may see steep population declines in the future, demographers warn, including China, Japan, Germany, Ukraine and others. The range worldwide is large, according to the CIA World Fact Book: from Niger's 6.89 down to Singapore's 0.8, based on 2014 estimates. At both ends, there are potential benefits and worries.

"We don't take a stance one way or the other on whether it's good or bad," said Mark Mather, demographer with the Population Reference Bureau. Small year-to-year changes like those experienced by the United States don't make much difference, he noted. But a sharp or sustained drop over a decade or more "will certainly have long-term consequences for society," he said.

Best guesses

What will happen in 50 or 100 years is speculative, the math complicated, said Philip N. Cohen, professor of sociology at University of Maryland. Very low fertility rates could lead to population declines, which could be bad for the economy.

But what concerns most people is not the rate itself, but changes in the rate and how dramatic they are. Low fertility itself is not as bad as falling fertility can be. When fertility falls, a generation is smaller than the one that came before and struggles to support retirees. Still, if that new rate holds, the population can stabilize over time. "It's the change that creates the shock. That's what concerns people," Cohen said.

Gradually declining population sizes might be ideal for the environment and stability, he noted. Gradually growing populations, on the other hand, might also be good if they generate dynamism and economic growth.

Rapid contraction of the labor force could have a negative impact on an economy, on growth, consumption and on the ability of current generations to pay for entitlements for older Americans, said Brad Wilcox, director of the National Marriage Project.

It's a concern in real time for countries like Europe and East Asia, now experiencing quite low fertility rates, he said. They may soon see their labor forces shrink. At risk is the ability to maintain their economies, pay pensions, handle health care demands and more. But fertility is one factor among many, he noted, including the importance of education and whether the infrastructure is healthy.

Whether a particular fertility rate is a demographic dividend or deficit changes. A generation of children becomes a generation of workers and parents and then a generation of retirees. Its size relative to the other generations in life's pipeline matters.

Germany has been strong economically, Wilcox said. On its current course, however, it will face major problems as a large workforce moves into retirement. That's an issue cropping up in many countries.

Too many people?

In the late 1960s, Stanford University professor Paul R. Ehrlich's book, "The Population Bomb," was published, reflecting growing concerns over the planet's ability to sustain a "population explosion."

The growth at that time came not from more births, but from people figuring out how to increase life expectancy by saving children from preventable deaths, Cohen said. Any period of change when things are out of balance between generations can lead to problems or worries about problems.

There are various ways to think about what a fertility rate means, he said, such as the immediate impacts of how many children a family has. With fewer children, parents put more resources into each one, he said. "The price of raising a child goes up, but the benefits also go up. The hope is the increase in children's fortunes makes up for the greater expense and they do better in school, in college, are more productive economically."

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