Declining populations

Interesting essay on the negative economic consequences of depopulation in the U.S. journal Foreign Affairs from a couple of years ago (Foreign Affairs is that dry looking thing that you would never dream of picking up which sits near the current affairs weeklies in Borders).

The author Philip Longman takes the old Malthusian scaremongering about overpopulation and turns it on its head ...

Most people think overpopulation is one of the worst dangers facing the globe. In fact, the opposite is true. As countries get richer, their populations age and their birthrates plummet. And this is not just a problem of rich countries: the developing world is also getting older fast. Falling birthrates might seem beneficial, but the economic and social price is too steep to pay. The right policies could help turn the tide, but only if enacted before it's too late.

Of course, Longman was not the only one to pick up this meme in 2004, however. Longman's book The Empty Cradle sounds like it will repeat many of the themes of Ben Wattenberg's Fewer: How The Demography of Depopulation will Reshape our Future which came out at more or less the same time.

Depopulation has of course been a concern for European governments for many years so it is interesting to see that it is also rising up the agenda in the US. Most Western European nations long since dipped below replacement levels and have been relying on net inward migration to maintain their populations.

More from Longman:

A look at demographic trends shows that the rate of world population growth has fallen by more than 40 percent since the late 1960s. And forecasts by the UN and other organizations show that, even in the absence of major wars or pandemics, the number of human beings on the planet could well start to decline within the lifetime of today's children. Demographers at the International Institute for Applied Systems Analysis predict that human population will peak (at 9 billion) by 2070 and then start to contract. Long before then, many nations will shrink in absolute size, and the average age of the world's citizens will shoot up dramatically. Moreover, the populations that will age fastest are in the Middle East and other underdeveloped regions. During the remainder of this century, even sub-Saharan Africa will likely grow older than Europe is today.

As Malcolm Gladwell discusses in the New Yorker this week, both increasing and decreasing populations can offer economic benefits. He quotes research by David Canning and David Bloom on the economic boom in Ireland which suggests that the dependency ratio is can be the key to economic health. The dependency ratio is the relationship between the number of people who aren’t of working age and the number of people who are. The higher the dependency ratio, the higher the social cost of supporting those that don't work.

In Ireland during the sixties, when contraception was illegal, there were ten people who were too old or too young to work for every fourteen people in a position to earn a paycheck. That meant that the country was spending a large percentage of its resources on caring for the young and the old. Last year, Ireland’s dependency ratio hit an all-time low: for every ten dependents, it had twenty-two people of working age. That change coincides precisely with the country’s extraordinary economic surge.

Gladwell also notes that dependency ratios have offered an explanation to many of the differences in the wealth of nations ...

Economists have long paid attention to population growth, making the argument that the number of people in a country is either a good thing (spurring innovation) or a bad thing (depleting scarce resources). But an analysis of dependency ratios tells us that what’s critical is not just the growth of a population but its structure. “The introduction of demographics has reduced the need for the argument that there was something exceptional about East Asia or idiosyncratic to Africa,” Bloom and Canning write, in their study of the Irish economic miracle. “Once age-structure dynamics are introduced into an economic growth model, these regions are much closer to obeying common principles of economic growth.”