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The End of Economic Growth? Unintended Consequences of a Declining Population

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  • Charles I. Jones

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.

Suggested Citation

  • Charles I. Jones, 2022. "The End of Economic Growth? Unintended Consequences of a Declining Population," American Economic Review, American Economic Association, vol. 112(11), pages 3489-3527, November.
    • Handle: RePEc:aea:aecrev:v:112:y:2022:i:11:p:3489-3527
    DOI: 10.1257/aer.20201605
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    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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