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A public policy blog from AEI
From the Wall Street Journal:
U.S. births declined and the death rate rose last year in a sign of continuing pressure on the country’s population growth, newly released federal figures show. Preliminary numbers out Thursday from the Centers for Disease Control and Prevention show there were 3.98 million births in the U.S. in 2015. That is down 0.3% from 2014 and reverses a one-year rebound when the number of births rose slightly…. What is expected to worry some demographers is that the total number of U.S. births was lower than they projected, affirming concerns the country is struggling to recover from a childbearing slowdown sparked by the start of the recession in 2007.
The birth figures follow another set of preliminary data released this week showing the U.S. death rate rose for the first time since 2005…. A main factor was the death rate for heart disease increased slightly after declining each year since 1993. A rise in deaths from stroke and Alzheimer’s disease also contributed to the increase. Data for deaths from drug overdoses and suicide weren’t complete for the year, though early figures showed those climbed as well. “We’re in a period where population growth has been a bit slower,” said Jeffrey Passel, senior demographer at the Pew Research Center. “To keep the labor force growing, we’re going to need to have pretty healthy levels of immigration.”
Slowing labor force growth is a big reason why economists think the US will grow more slowly in the future than it has since World War Two. As the Obama economist team wrote back in 2013: “In the 21st Century, real GDP growth in the United States is likely to be permanently slower than it was in earlier eras because of a slowdown in labor force growth initially due to the retirement of the post-World War II baby boom generation, and later due to a decline in the growth of the working age population.”
And here is McKinsey: “In the 1970s, the United States could rely on a growing labor force to generate roughly 80 cents of every $1 gain in GDP. During the coming decade, assuming no dramatic increase in hours worked, that ratio will roughly invert: labor force gains will contribute less than 30 cents to each additional dollar of economic growth.”
Faster labor force growth — say, half the postwar average — might require higher birthrates, more immigration, and more Americans both in the workforce and staying in the workforce a bit longer. Here is the late Nobel laureate economist Gary Becker on the value of a younger, growing population in an advanced economy like America’s:
In richer countries, retirement incomes and medical care of the elderly are largely financed by taxes on the younger working population. Low birth rates eventually lead to fewer men and women of working ages, and hence a smaller tax base to finance social security payments, unless the fewer children born have sufficiently greater amounts invested in their education and other human capital.
Although potential difficulties in financing social security benefits are receiving the most attention, other negative effects of low birth rates may be of equal or greater importance. Low fertility reduces the rate of scientific and other innovations since innovations mainly come from younger individuals. Younger individuals are also generally more adaptable, which is why new industries, like high tech startups, generally attract younger workers who are not yet committed to older and declining industries.
The great majority of countries have had growing populations during the past 250 years as world population grew at unprecedented rates. Yet ever since Malthus wrote his great work on the harmful effects of population growth on incomes, group after group have opposed high fertility and growing populations as bad for the world’s food supply, standard of living, and environment, including local and global pollution.
However, these possible negative effects of larger populations have to be weighed against the sizable benefits from more people. These benefits include a larger number of young persons who, as mentioned earlier, are more likely to innovate, such as coming up with more efficient ways to grow food, and pay for the benefits to retired men and women. A bigger population also increases the demand for new drugs, software, social networking, and other innovations that have increasing returns to the scale of demand.
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