1. Do Nothing. Declining population has many benefits: Less congestion, less pollution, better for the environment. Also, it can be argued, the birth-rate is not the problem of the government anyway. It is an individual issue.
2. Subsidies to have more children. In Germany and Italy the governments have flirted with the idea of economic incentives for couples to have more children. However, given the huge cost of bringing up children. Is there anything the government can do to change people's preferences? Basically, the demand for children in very price inelastic. A small subsidy is unlikely to make much differences to people’s preferences.
3. Make People work longer. If you have a growing % of people entitled to pensions, this creates a real fiscal problem. The solution is to raise the retirement age. If people are living longer, why shouldn’t they work longer? The alternative of higher taxes could create serious disincentives in the economy.
4. Encourage Immigration. Falling birth-rates are a problem in affluent western economies. It is precisely these countries that are the ideal place for many seeking to avoid poverty and repression in developing countries. Immigration could easily fill the labour shortages. Some may argue it depends on the type of immigrants. E.g. English speaking skills, age of immigrants, Qualifications.

• How to deal with an Ageing Population

• Reasons for a declining population
• Economic Effects of a declining Birthrate
  

Labels: demographics

1. Increase in Dependency Ratio. Higher number of retired people to those active in the labour force.
2. Higher taxes on those of working age. Because of the increased number of old people. Government spending on pensions and health care increases. As a consequence the government are obliged to raise taxes to avoid a deficit shortfall.
3. Change in sectors of the economy. Although the government may have to spend more on health care and retirement homes, there may be less demand for schools and education spending. This enables the government to make some savings to offset the extra spending.
4. Change in demand for labour. A decline in birth-rates will shift demand for labour. Less demand for child care assistants more demand for care workers. However, this shift will be gradual and should occur gradually.

See also: Impact of an Ageing Population

Labels: demographics

What happens when a population starts to decline? Declining birth-rates are becoming a real problem in much of western Europe and countries like Japan. According to Economist July 28th 2007, 4 out of 9 people now live in a country where the brith-rate is below the replacement ratio (about 2.1 children per couple)


The reasons behind declining birth-rates are a combination of social, cultural and economic factors.

Reasons for decline in Birth rate and Population

1. One of the main reasons for the falling birth-rate, is the changing expectations of women. Women tend to get married later (if at all). This leave less time for having children
2. Increased career opportunities for women. Women have gained an increasing number of opportunities to work in highly paid jobs, which were previously the preserve of men. (see: why women still get paid less than men)
3. Economic Choices. It is perhaps ironic, that increased economic growth and prosperity actually seems to give people a higher priority to the economic costs of having children. Increased prosperity means people have higher expectations about living standards. The cost of raising children is higher than ever before. Therefore, young couples often choose to have 1 or 0 children to save the economic cost of having children. One study suggests the economic cost of having children is upto £200,000 for the first 16 years.

Labels: demographics