Tuesday, April 5, 2011

Declining Fertility as a Policy Problem

At the end of June, Moscow is to host the first 'international demographic summit' with over 1,000 participants. It is sponsored by the World Congress of Families.

Russia has a total fertility rate of about 1.2 lifetime births per woman (2.1 being the population replacement rate) and a decline of 6 million people over the past 20 years (12 million without immigration). According to Premier Vladimir Putin,
"Without exaggeration, the central problem of contemporary Russia is demography, strengthening the family, increasing the birth rate..."

In Russia, demographic decline is particularly evident, but throughout Europe, East and West, countries are not reproducing themselves. The conference will cover a number of fascinating topics, including culturally induced desire for smaller families, voluntary childlessness, low birthrates and economic decline, problems of an aging society and alcoholism's negative effects on demography.

The problem of low fertility, with the prospect of population decline and a rapidly increasing old-age dependency ratio is a challenge for Asia as well as Europe. According to a Reuters article,

By 2030, the share of the population aged over 60 in Japan will have grown to 37 percent from 30 percent last year. Germany and Italy will be just behind on 36 percent.

Just as striking, the proportion of elderly South Koreans is projected to double to 32 percent, according to the McKinsey Global Institute, the economics research arm of consultants McKinsey & Co.

China, of course, faces a particular policy-induced problem as a result of its one-child policy, in force for the Han majority since 1979. But China is not alone:
Right now, China has an old-age dependency ratio of 0.11, meaning there is just over one elderly Chinese for every 10 of working age. This will rise to 0.24 in 2030 and may exceed 0.43 by 2050, according to the Organization for Economic Co-operation and Development, a Paris-based forum for industrial democracies…China is not alone in facing a pensions bulge. In a report published last week, the World Bank said middle-income countries in East Asia can expect five times as many people as now to become eligible for a pension over the next two to three decades. Health care costs for a greying population will also jump.

I recall commenting 30 years ago to a social work dean in the region that China's policy would create future challenges as there came to be a big increase in the numbers of old people relative to those of working age and that increases in productivity and immigration would be unlikely to offset them. My impertinence elicited the response, "Do you think they haven't thought of that?" Of course I did not know then, and do not know now, how carefully China's ruling class considered the unintended side effects of its draconian state regulation of women's childbearing decisions - like the drag on economic growth that would come eventually from the high old age dependency ratio, the imbalance of the sexes that would result from sex-selective abortion and the social consequences of having large numbers of unattached, 'untamed' young adult males, and so forth.

Sources include: http://www.mercatornet.com/demography/view/8945/
On the Moscow Demographic Summit, see http://www.worldcongress.ru/en/home
See also, Alan Wheatley, "Analysis: Asia braces for its date with demographic destiny" at http://www.reuters.com/article/2011/03/29/us-asia-economy-demographics-idUSTRE72S0KP20110329?pageNumber=1

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