By the end of this century, China is likely to have a population of roughly half its present 1.4 billion. In part, this is a legacy of its one-child policy, implemented in 1979. Despite the cessation of the policy in 2015, though, China’s fertility rate continues to languish at about 1.1.
South Korea and China are outliers. South Korea has the lowest fertility rate in the world and China has the seventh lowest. But fertility has been declining worldwide for several decades.
New Zealand’s current fertility rate is about 1.6, down from 2.1 in 2013. That means we will need to rely on immigration to maintain or grow our population.
According to estimates from the United Nations (UN), the world’s population is likely to peak at about 10 billion around 2080, after which it will decline, initially at a gradual rate, but more rapidly in the 22nd century.
Some commentators have pointed out that the UN estimates are based on a questionable assumption – that fertility will soon start rising again in large countries like China and the US. A more realistic scenario may be that world population will peak in the 2050s, somewhat short of nine billion.
Attempting to estimate population trajectories beyond 2100 is a heroic enterprise – but one thing is certain: Unless the declining world fertility rate turns around, the human population will fall – and keep on falling.
Many will celebrate this news. Environmentalists have long argued that the world is overpopulated. It is true that fewer people would mean less pollution, less pressure on water systems, and lower carbon emissions.
There are downsides to population decline, however.
For one thing, populations will not decline evenly. Instead, large urban areas are likely to maintain their populations or even grow, while smaller centres turn into ghost towns.
Perhaps the most serious problem is that, when each succeeding generation is smaller than the last, the old permanently outnumber the young. There will be fewer and fewer working-aged people supporting more and more retirees. According to the New Zealand Treasury, in the 1970s, working-aged adults outnumbered retirees by a ratio of 7:1. Currently, that ratio is 4:1. In 50 years, it is projected to be 2:1.
Many older people won’t have children to help them in their declining years. There will be an ever-growing strain on superannuation and healthcare budgets. Moreover, in democracies, older voters will have an outsized share of political influence. That will make it difficult to reprioritise resources towards the young, by raising the age of eligibility of the National Super, for example.
Some countries, including relatively wealthy ones like New Zealand, will be able to stave off the economic problems that come with a perpetually ageing population through immigration, for a while at least. But sooner or later, if fertility rates around the world decline enough, sources of younger immigrants will dry up. If young immigrants become a scarce resource, wealthier countries will be propping up their populations at the expense of poorer countries. Skilled immigrants will be in especially short supply.
Unless they subscribe to the views of the voluntary human extinction movement, at some point, policy makers will want population decline to stop. But fertility rates do not readily respond to policy decisions. The Chinese government, alarmed by its already-falling population, is now offering financial incentives to encourage people to have more children. So far, this is having little effect.
From a policy perspective, there is no straightforward way to directly address looming population decline or the associated issue of a perpetually ageing population.
No one should have children if they don’t want to. Instead, policymakers should focus on removing barriers for those who do.
The greatest barrier is probably financial. Understandably, most people want a degree of financial security before they become responsible for children. For women, especially, this can be a race against time.
Solving two problems, both of which New Zealand needs to address anyway, might make a substantial difference. One is the housing market. The other is economic productivity.
If young people are locked out of the housing market, they are likely to lack the sense of security they need to have children. Sophisticated modelling by economist Benjamin Couillard suggests that rising housing costs accounted for as much as half of the decline in American fertility early this century.
Productivity – GDP per hour worked – is a long-standing issue for the New Zealand economy. During the1990s, New Zealand’s productivity growth accelerated following fiscal and regulatory reforms. Aside from that relatively brief period, though, our growth has lagged that of Australia and other developed economies for decades. Now we are falling further and further behind.
The current government has taken steps to address both issues. It could do more.
Policies that liberalise residential land zoning and building height restrictions, simplify resource consent, and remove regulatory hurdles to competition in building materials are all important steps towards less expensive housing.
Rolling out the welcome mat for direct foreign investment in our economy to create more high wage jobs would be one way to revive New Zealand’s sclerotic productivity growth.
Governments cannot control people’s fertility choices and should never seek to do so. But they should do all they can to establish the prosperity that enables people to become parents if they wish.
The future of humanity literally depends on it.
Dr Michael Johnston is a Senior Fellow at the New Zealand Initiative. This article was first published HERE
New Zealand’s current fertility rate is about 1.6, down from 2.1 in 2013. That means we will need to rely on immigration to maintain or grow our population.
According to estimates from the United Nations (UN), the world’s population is likely to peak at about 10 billion around 2080, after which it will decline, initially at a gradual rate, but more rapidly in the 22nd century.
Some commentators have pointed out that the UN estimates are based on a questionable assumption – that fertility will soon start rising again in large countries like China and the US. A more realistic scenario may be that world population will peak in the 2050s, somewhat short of nine billion.
Attempting to estimate population trajectories beyond 2100 is a heroic enterprise – but one thing is certain: Unless the declining world fertility rate turns around, the human population will fall – and keep on falling.
Many will celebrate this news. Environmentalists have long argued that the world is overpopulated. It is true that fewer people would mean less pollution, less pressure on water systems, and lower carbon emissions.
There are downsides to population decline, however.
For one thing, populations will not decline evenly. Instead, large urban areas are likely to maintain their populations or even grow, while smaller centres turn into ghost towns.
Perhaps the most serious problem is that, when each succeeding generation is smaller than the last, the old permanently outnumber the young. There will be fewer and fewer working-aged people supporting more and more retirees. According to the New Zealand Treasury, in the 1970s, working-aged adults outnumbered retirees by a ratio of 7:1. Currently, that ratio is 4:1. In 50 years, it is projected to be 2:1.
Many older people won’t have children to help them in their declining years. There will be an ever-growing strain on superannuation and healthcare budgets. Moreover, in democracies, older voters will have an outsized share of political influence. That will make it difficult to reprioritise resources towards the young, by raising the age of eligibility of the National Super, for example.
Some countries, including relatively wealthy ones like New Zealand, will be able to stave off the economic problems that come with a perpetually ageing population through immigration, for a while at least. But sooner or later, if fertility rates around the world decline enough, sources of younger immigrants will dry up. If young immigrants become a scarce resource, wealthier countries will be propping up their populations at the expense of poorer countries. Skilled immigrants will be in especially short supply.
Unless they subscribe to the views of the voluntary human extinction movement, at some point, policy makers will want population decline to stop. But fertility rates do not readily respond to policy decisions. The Chinese government, alarmed by its already-falling population, is now offering financial incentives to encourage people to have more children. So far, this is having little effect.
From a policy perspective, there is no straightforward way to directly address looming population decline or the associated issue of a perpetually ageing population.
No one should have children if they don’t want to. Instead, policymakers should focus on removing barriers for those who do.
The greatest barrier is probably financial. Understandably, most people want a degree of financial security before they become responsible for children. For women, especially, this can be a race against time.
Solving two problems, both of which New Zealand needs to address anyway, might make a substantial difference. One is the housing market. The other is economic productivity.
If young people are locked out of the housing market, they are likely to lack the sense of security they need to have children. Sophisticated modelling by economist Benjamin Couillard suggests that rising housing costs accounted for as much as half of the decline in American fertility early this century.
Productivity – GDP per hour worked – is a long-standing issue for the New Zealand economy. During the1990s, New Zealand’s productivity growth accelerated following fiscal and regulatory reforms. Aside from that relatively brief period, though, our growth has lagged that of Australia and other developed economies for decades. Now we are falling further and further behind.
The current government has taken steps to address both issues. It could do more.
Policies that liberalise residential land zoning and building height restrictions, simplify resource consent, and remove regulatory hurdles to competition in building materials are all important steps towards less expensive housing.
Rolling out the welcome mat for direct foreign investment in our economy to create more high wage jobs would be one way to revive New Zealand’s sclerotic productivity growth.
Governments cannot control people’s fertility choices and should never seek to do so. But they should do all they can to establish the prosperity that enables people to become parents if they wish.
The future of humanity literally depends on it.
Dr Michael Johnston is a Senior Fellow at the New Zealand Initiative. This article was first published HERE
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