An Ageing Population May Be A Good Thing After All

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As birth rates decline in the developed world, threatening to clog the economy with an ageing population, a global study suggests that it actually pays to have fewer children.

Researchers in 40 countries correlated birth rates with economic data and concluded that a moderately low birth rate – a little below two children per woman – can actually boost a country’s overall standard of living.

While governments generally favour higher birth rates to maintain the work force and tax base needed to fund pensions, health care and other benefits for the elderly, it is typically families which bear the brunt of the cost of having children.

“Higher fertility imposes large costs on families because it is they, rather than governments, that bear most of the costs of raising children,” says said University of California, Berkeley, demographer Ronald Lee

“Also, a growing labour force has to be provided with costly capital such as factories, office buildings, transportation and housing.

“Instead of trying to get people to have more children, governments should adjust their policies to accommodate inevitable population ageing.”

The researchers compared government and private spending among all age groups using the National Transfer Accounts project, which studies how population changes impact economies across generations, and which they co-direct.

Their calculations were based on finding the birth rate and age distribution that would best balance the costs of raising children and of caring for the elderly.

They found that the US birth rate is close to ideal for government budgetary needs, but that in parts of Europe and East Asia, average fertility rates are so low that they reduce living standards when public and private costs are included.

A more complete accounting of the costs of children shows only a few countries in East Asia and Europe where the governments should encourage people to have more children.

In the United States and other high- and middle-income countries, people are having about the number of kids that are best for overall standards of living.

The study, co-authored by Andrew Mason, an economist and senior fellow at the East-West Center in Hawaii, is published in the journal Science.