The End of Economic Growth? Unintended Consequences of a Declining Population
American Economic Review · 2022 · Volume 112 · Issue 11
Abstract
In many models, economic growth is driven by people discovering new ideas. These models typically assume either a constant or growing population. However, in high income countries today, fertility is already below its replacement rate: women are having fewer than two children on average. It is a distinct possibility that global population will decline rather than stabilize in the long run. In standard models, this has profound implications: rather than continued exponential growth, living standards stagnate for a population that vanishes. Moreover, even the optimal allocation can get trapped in this outcome if there are delays in implementing optimal policy.
Keywords
Health Behavior, Demographic Trends, Macroeconomic Effects, and Forecasts, Fertility, Family Planning, Child Care, Children, Youth, One, Two, and Multisector Growth Models
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