Massachusetts: Declining birth rates around the world have gotten many people worried about the economic impact, with predictions of slower growth and less innovation. But a new paper finds that the opposite may be true.
Ageing and shrinking populations have historically raised an economy’s output per worker and had no damping effect on overall gross domestic product (GDP), according to a new study by Daron Acemoglu – who won the Nobel economics prize in 2024 – David Autor, Keelan Beirne and Andrew Scott.
It found that workers and companies turned to technology to augment a reduced labour force, raising the productivity of each worker.
“Our findings challenge the prevailing pessimism: lower birth rates, and the ageing and shrinking populations they have produced, have raised rather than lowered GDP per ‘worker’,” the authors wrote in a paper distributed by the National Bureau of Economic Research.
That gain “has been large enough to fully offset the negative effect of population decline, leaving aggregate GDP broadly unaffected”. — Bloomberg
