This week at the Economics Observatory, we explore issues around falling fertility and ageing populations – from why people in rich countries are having fewer children to the global economic consequences, and how demographic factors such as age shape wellbeing.
Newsletter from 13 February 2026
Across much of the world, people are having fewer children. Half a century ago, this would have been seen as a solution rather than a problem: fears of overpopulation loomed large – from Paul Ehrlich’s book The Population Bomb to China’s one-child policy. But today, it’s a concern.
Global fertility has fallen to around 2.25 births per woman in 2023, down from around five in the mid-20th century (see Figure 1). In England and Wales, fertility has dropped to 1.41, the lowest level on record and well below what’s needed for a population to remain stable (known as the replacement rate), which is 2.1.
Figure 1. Global total fertility rate, 1960-2023
Source: World Bank.
Why does this matter? Because population trends shape what our economies and societies look like. As birth rates fall and societies age, the number of retirees grows faster than the workforce. This tightens public finances, strains health and pension systems, and erodes one of the long-standing tailwinds behind economic growth – a ‘demographic dividend’. For decades, a growing working-age population has helped to boost incomes and ease fiscal pressures. In many countries, that dividend is now shrinking or has disappeared altogether.
These shifts are most pronounced in richer economies, like Singapore and South Korea, where fertility has fallen well below the replacement rate (1 and 0.72, respectively). A myriad of factors drive down birth rates – it’s not simply a matter of personal preference. People are having fewer children than they say that they would ideally like, reflecting economic insecurity, housing constraints, unequal divisions of care, health concerns and uncertainty about the future.
In a survey of British adults who delayed or decided against having children, 36% cited the cost of living, while 15% felt that the world is simply too dangerous (Ipsos Polling, 2025). Fertility decisions are shaped as much by the conditions of people’s lives as by their preferences (see Figure 2).
Figure 2. Reasons for British adults to delay or decide against having children
Source: Ipsos Polling, 2025.
This means that responding to falling fertility is far from straightforward. In an Economics Observatory article from 2024, Amanda Hill-Dixon (Cardiff University) argues that policies such as generous parental leave, affordable childcare and support for work–family balance can help to narrow the gap between desired and actual family size, but their effects are typically modest and slow to emerge. As a result, governments must grapple not only with how to support parenthood in the long run, but also with how demographic change reshapes economies and societies today.
This week at the Observatory, we have explored population and fertility decline from three angles: how falling birth rates are reshaping the global economy; why rich countries are seeing particularly sharp drops in fertility; and how demography, especially age, shapes the way in which political shocks are experienced.
After the demographic dividend
In our first article of the week, Federica Coelli and Pablo Garcia-Guzman (European Bank for Reconstruction and Development, EBRD) examine how falling fertility is transforming economies worldwide.
More than two-thirds of humanity now live in countries with fertility below the replacement rate, and the United Nations projects that global population growth will slow steadily and eventually reverse later this century.
Federica and Pablo argue that a defining feature of this fall in fertility is that it is happening earlier in countries’ development. Historically, fertility falls only after countries become rich. Today, more middle-income economies are ageing before they have built the productivity, fiscal capacity and institutions needed to manage the shift. In effect, the window to enjoy a demographic dividend is being compressed.
There are two main consequences to losing this precious dividend. First, and in the long run, population decline slows innovation and productivity growth by shrinking the pool of potential innovators – an ‘empty planet scenario’ in which new ideas become harder to find.
Second, in the near term, the most pressing consequences come from changing population structure. As large cohorts retire and are replaced by smaller cohorts entering the labour market, the working-age share of the population falls, mechanically slowing economic growth and straining the fiscal foundations of modern welfare states. With fewer workers to support a growing pensioner population, the implicit intergenerational contract in which each cohort supports the next, expecting similar treatment in return, becomes increasingly difficult to sustain.
Using demographic projections, Federica and Pablo quantify this ‘cost of ageing’. They propose that the contribution of the demographic dividend to GDP per capita growth will become negative in all regions by 2050, bar the Middle East and sub-Saharan Africa.
Policies to raise fertility, such as increasing migration or boosting labour force participation, may help, but they are unlikely fully to offset the economic effects. The favourable demographic conditions of the last century are not coming back, and eventually we will need to adapt to an emptier, older world.
From costs to culture
Our second article of the week – by Ann Berrington (University of Southampton) and Hill Kulu (University of St Andrews) – takes a closer look at why people are having fewer children, particularly in wealthy countries.
Similar fertility declines have occurred across almost all rich countries, though levels vary: from 1.68 births per woman in France to 0.72 in South Korea. Ann and Hill group the causes of falling fertility into five broad themes: rising education, higher economic costs, housing constraints, changing gender roles and shifting preferences.
Economic constraints are a main reason for fertility decline. Higher levels of education and employment, especially among women, have raised the opportunity cost of parenthood. At the same time, secure employment and affordable housing have become harder to achieve, leaving many young adults facing prolonged economic uncertainty. Even when headline employment improves, perceptions of instability continue to weigh heavily on decisions about having children.
Gender dynamics also matter. Women’s gains in education and paid work have not been matched by equal progress in the division of unpaid household labour, with women still carrying most domestic and childcare responsibilities. Even places often seen as models of progression – like the Nordic countries, with generous parental leave and subsidised childcare – have not been immune. In Finland, for example, fertility fell from 1.9 to 1.3 between 2010 and 2023. This has led some demographers to suggest a new behavioural norm: later parenthood and smaller families.
Yet a persistent fertility gap remains. Across high-income countries, people have fewer children than their stated ideal. This ‘unrealised fertility’ reflects not only economic pressures, but also health constraints and difficulties finding the right partner.
The authors conclude that pro-natalist policy responses have frequently fallen short. Cash incentives and baby bonuses may shift the timing of births, but they rarely raise completed family size. More effective approaches would need to be holistic and long-term – addressing housing, job security, gender equality and work-family balance. Importantly, success should not be judged by higher birth rates alone, but by whether policies allow people to realise their fertility intentions and expand reproductive freedoms.
The age divide
In our final article of the week, Valentina Di Iasio, Corrado Giulietti and Jackline Wahba (University of Southampton) examine how the Brexit referendum affected the mental health of different groups in the UK. They show that the consequences for wellbeing of political shocks like the decision to leave the European Union are not felt equally across society, but disproportionately affect the young.
Using longitudinal data from Understanding Society, they find that young people from ethnic minority backgrounds experienced a significant deterioration in mental health after the Brexit vote, particularly in areas with stronger support for Leave. This pattern does not appear among white British youth, nor among older members of ethnic minority groups.
The results highlight strong age heterogeneity in response to political change. Early adulthood is a life stage already marked by transition and vulnerability, and the referendum reshaped public debates around immigration, identity and belonging in ways that appear to have disproportionately affected younger ethnic minorities.
This finding aligns with evidence showing that young people often bear the brunt of economic shocks. For example, during the Covid-19 pandemic, job losses were concentrated disproportionately among those aged 18-24.
The young are some of the most vulnerable people to political and economic change. And as fertility falls and populations age, younger generations are increasingly exposed to instability while also being expected to shoulder a growing share of economic and social burdens. In short, demographic change is not only about birth rates, but also about who bears the risks and pressures of change.
Beyond birth rates
The era of easy demographic dividends is over. Falling fertility and population change are not short-term shocks that can be tackled with a single policy lever. Rather, they are structural changes that will shape economies and societies for decades to come.
Policy attempts to ‘fix the baby bust’ have often delivered limited results, because fertility reflects deeper conditions: housing, job security, gender equality, health and confidence in the future. Short of meaningful progress in these areas, the challenge is likely not to lie in restoring the demographic dividend of the past, but rather in adapting to a less-populated and slower-growing world.
As younger generations face rising economic uncertainty, and as political and economic shocks fall unevenly across age groups, they are also likely to carry an increasing share of the burden in ageing societies. This makes it especially important that fertility is not treated as a numbers game alone.
Policies intended to raise fertility should be judged not only by higher birth rates, but by whether people are able to live securely, realise their fertility intentions and provide well for the children whom they choose to have.
