Thread by @Noahpinion

1/Today's @bopinion post is about the long-term consequences of a very-low-fertility world.

bloomberg.com/opinion/articl…

2/You think Japan and Germany are low-fertility countries? Check out South Korea, where the fertility rate fell to an almost unheard-of 0.98 in 2018!!

3/Starting as soon as next year, Korea's population will begin to shrink rapidly.

asia.nikkei.com/Economy/South-…

4/South Korea's total economy will almost certainly shrink in size as a result. But does that mean living standards will go down?

Mathematically, it doesn't have to. Countries can keep getting richer even as they shrink.

For example, here's Japan:

5/But there actually are several reasons why a shrinking, aging population puts downward pressure on living standards.

First of all, it increases the dependency ratio. Each young worker has to support the consumption of a larger and larger number of retirees.

6/Second, it could make companies reluctant to invest in what they know is a shrinking market.

7/Third, it could make productivity growth go down.

imf.org/external/pubs/…

8/All in all, severe aging seems bad for per capita growth, not just total growth.
nber.org/papers/w22452

9/Here's yet another paper (by @ModeledBehavior et al) in case you still don't believe me!
ma.moodys.com/rs/961-KCJ-308…

10/So what can countries do to ameliorate these effects?

The answer is: Not much.

medium.com/migration-issu…

11/The best thing to raise fertility rates in rich countries is to help parents take care of kids, with free child care etc. But the effect of these policies is modest.

ifstudies.org/blog/feminism-…

12/This leaves one solution for falling populations:

IMMIGRATION.

13/For the U.S., immigration can (and does!) totally cancel out population decline. For countries with fertility rates only slightly below replacement, like France, it can do so as well.

But for South Korea, the amount of immigration required would be staggering.

14/Also, there's the fact that fertility rates have fallen - and are still falling - all over the world.

China, for example, will probably be Korea's main source of immigrants, but it's facing a similar demographic situation.

reuters.com/article/us-chi…

15/Here's a map of total fertility rates for 2018. Africa is the only region where people are still having significantly more kids than the replacement level.

Thus, after maybe 2050 or so, Africa will be the world's main source of non-refugee immigration.

16/But even in Africa, the fertility transition is coming.

17/So ultimately, human societies will just have to find ways to cope with aging, shrinking populations.

South Korea will be an example to us all.

18/If any country has a government effective enough to cope with massive rapid aging, it's probably South Korea! Let's watch carefully and see what they do.

(end)

bloomberg.com/opinion/articl…