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The High Cost of Low Fertility in Europe

Author

Listed:
  • David E. Bloom

    () (Harvard School of Public Health)

  • David Canning

    () (Harvard School of Public Health)

  • Günther Fink

    () (Harvard School of Public Health)

  • Jocelyn E. Finlay

    () (Harvard School of Public Health)

Abstract

We analyze the effect of fertility on income per capita with a particular focus on the experience of Europe. For European countries with below-replacement fertility, the high cost of continued low fertility will only be observed in the long run. We show that in the short run, a fall in the fertility rate will lower the youth dependency ratio and increase the working-age share, thus raising income per capita. In the long run, however, the burden of old-age dependency dominates the youth dependency decline, and continued low fertility will lead to small working-age shares in the absence of large immigration inflows. To illustrate these effects we construct a population accounting model and simulate steady-state outcomes. Regression analysis indicates the differing marginal effects of long-term fertility change in Europe versus the rest of the world.

Suggested Citation

  • David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2008. "The High Cost of Low Fertility in Europe," PGDA Working Papers 3208, Program on the Global Demography of Aging.
  • Handle: RePEc:gdm:wpaper:3208
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    File URL: http://www.hsph.harvard.edu/pgda/WorkingPapers/2008/PGDA_WP_32.pdf
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    References listed on IDEAS

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    Keywords

    demography; growth; age structure; population; economy.;

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