Declining Fertility and Consequence:
- Global population could grow to around 8.5 billion in 2030
- Average global fertility has been consistently declining over the past 70 years.
- The average number of children per woman in the reproductive age group has declined from an average of five children per woman in 1951 to 2.4 children in 2020 (World Population Prospects 2022)
- Most advanced economies have their fertility rate below the replacement rate of 2.1, with South Korea reporting the lowest at 1.05 children per woman
The current fertility rate for India in 2022 is 2.159 births per woman.
As reported by the NFHS 2021, only five States have a fertility rate above the replacement rate: Bihar (3), Meghalaya (2.9), Uttar Pradesh (2.4), Jharkhand (2.3), and Manipur (2.2).
Reasons for a steady decline in fertility rates in India:
- increased use of contraception
- more years of average schooling
- better health care, and an
- increase in the mean marriage age of women.
Lower fertility rates as a cause and consequence of economic development:
- Lower fertility impacts women’s education positively, which in turn lowers the fertility of the next generations.
- With better infrastructure development, better health care, and education, fertility drops, and income rises.
- The spiral of lower fertility leads to a window of time when the ratio of the working-age population is higher than that of the dependent age groups.
- This high proportion of people in the workforce boosts income and investment, given the higher level of saving due to lower dependence.
Negative implications of falling fertility rate:
- A fall in fertility rate beyond replacement level would have a negative effect on the proportion of the working population, which in turn will affect output in an economy.
- Japan was the first country to experience the implications of falling fertility rates.
- The increasing dependency ratio has led to near zero GDP growth since the 1990s.
- Some experts believe that falling fertility could diminish the creative capacity of humankind.
- An ageing population will also affect global interest rates negatively as the share of people over 50 years will form almost 40% of the population by 2100.
Solutions to deal with fertility decline:
- Reforms in the labour market to induce more flexibility in the labour market would encourage working women to have more children and non-working mothers to enter the labour market.
Policies to boost fertility acrosss the world:
- Germany allows more parental leave and benefits.
- Denmark offers state-funded IVF for women below 40 years
- Hungary recently nationalised IVF clinics.
- Poland gives out monthly cash payments to parents having more than two children
- Russia makes a one-time payment to parents when their second child is born
Though the benefits of demographic dividends are being reaped, the below replacement level fertility rate would mean a smaller dividend window than expected for India.
Liberal labour reforms, encouraging higher female labour force participation rate, and a higher focus on nutrition and health would ensure sustained labour supply and output despite lower fertility.