Birthrates are declining globally – here’s why it matters
- Birthrates are falling globally.
- In many countries, COVID-19 has suppressed population growth by causing a decline in births, migration and life expectancy.
- Even before the pandemic, urbanization was driving population decline.
At the end of May, the Chinese Government announced that parents in China would now be permitted to have up to three children. This announcement came only five years after the stunning reversal of the 1980 one-child policy.
Something is clearly going on.
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That something is that China has experienced a fertility collapse. According to the latest census released in May, China is losing roughly 400,000 people every year. China still claims its population is growing, but even if these projections are taken at face value, the population decline previously projected to start by mid-century may now begin as early as 2030. This means China could lose between 600 and 700 million people from its population by 2100.
That’s right: 600 and 700 million people, or about half of its total population today.
China’s population changes are not unique among the superpowers. According to the United States’ most recent census, the US birthrate has declined for six straight years and 19% since 2007 in total. Like China, the US birthrate is now well below replacement rate at 1.6. (China is now at 1.3.) For a country to naturally replace its population, its birthrate needs to be at least 2.1.
You can also add the world’s second-most populous country, India, to the list of low-fertility countries, with a birthrate at replacement rate (2.1). Also include Japan (1.3), Russia (1.6), Brazil (1.8), Bangladesh (1.7) and Indonesia (2.0).
There are still big countries with high birthrates, such as Pakistan (3.4) and Nigeria (5.1). But even these numbers are lower than they were in 1960 – when Pakistan was at 6.6 and Nigeria at 6.4 – and declining every year.
The role of COVID-19 in declining birthrates
The COVID-19 pandemic is serving as a modifier – but not in the way commentators and comedians suggested when lockdowns began.
Remember all the jokes about people being stuck at home leading to a baby boom?
As the data rolls in, its clear that in many countries, the opposite has occurred. Most children these days are wanted or planned children, especially in the developed world. Deciding to have a baby is contingent on being optimistic about the future – and optimism is difficult to muster during a global pandemic. In fact, the Brookings Institute estimates that 300,000 babies were not born in the US as a result of economic insecurity related to the pandemic.
Could this be a short-term phenomenon ready for correction?
Possibly. Some analysts are anticipating a mini baby boom once vaccines are widely available and restrictions are lifted. But even a mini baby boom is unlikely to fully compensate for the decline. Experience shows that when a couple defers having a child, for whatever reason, they typically don’t make it up later. The unborn baby remains unborn.
A decline in fertility is just one way the pandemic is suppressing population growth in many developed nations. The other: closed borders.
In 2020, Australia recorded its first population decline since World War I, due to stricter COVID-related border controls. Canada granted permanent-resident status to 180,000 applicants in 2020, far short of the target of 381,000 – and most of the new permanent residents were already in the country on student or work visas.
A third, grim factor is also at work: the death toll of the disease itself. Researchers predict that life expectancy in the United States has declined by a full year as a result of COVID deaths. Racial minorities were particularly hard hit, with African American life expectancy suppressed by two years and Latino life expectancy by three years.
Officially, the pandemic is responsible for more than 3 million deaths – but that figure could be far higher, since some countries may be under-reporting deaths. This is probable, for example, in India, where the pandemic is claiming 4,000 lives a day; many authorities believe the real count is far higher.
But it’s not only the pandemic…
As John Ibbitson wrote in Empty Planet: The Shock of Global Population Decline, the forces driving population decline have been in place since at least the turn of the century.
The biggest force is urbanization. The largest migration in human history has happened over the last century and it continues today as people move from the country to the city. In 1960, one-third of humanity lived in a city. Today, it’s almost 60%. Moving from the country to the city changes the economic rewards and penalties for having large families. Many children on the farm means lots of free hands to do the work. Many children in the city means lots of mouths to feed. That’s why we do the economically rational thing when we move to the city: we have fewer kids.
Moving to the city also changes the lives of women, exposing them to a different version of life than their mothers and grandmothers lived in the country. Urban women are much more likely to have an education and a career, as well as easier access to contraception. Lower birthrates are the inevitable result. That’s why first-time mothers today are older and have fewer children, and teenage pregnancies have dramatically declined. In most developed countries, the birthrate of women over 40 has surpassed the rate of women age 20 and younger.
We can expect that a great defining moment of the 21st century will occur in three decades or so when the global population starts to decline. COVID might have even pushed the start of this decline forward – but it certainly didn’t cause it.
Why population decline matters
Why should you care about population decline? Fewer people are good for the climate, but the economic consequences are severe. In the 1960s, there were six people of working age for every retired person. Today, the ratio is three-to-one. By 2035, it will be two-to-one.
Some say we must learn to curb our obsession with growth, to become less consumer-obsessed, to learn to manage with a smaller population. That sounds very attractive. But who will buy the stuff you sell? Who will pay for your healthcare and pension when you get old?
Because soon, humanity will be a lot smaller and older than it is today.
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. As of now, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.