The End of Population Growth
- Latest census data from around the world suggests that human population will peak at less than 9bn in the 2050s, almost half a century sooner than generally anticipated. Furthermore, global fertility will fall below the replacement rate in less than fifteen years. Population may keep growing for a few more decades because of momentum from the age structure and rising longevity but, reproductively speaking, our species should no longer be expanding. This would be a major turning point in the history of the human race.
- Birth rates have been low in developed countries for some time but they are now plunging in developing countries. The Chinese, Russians and Brazilians are no longer replacing themselves while the Indians are having fewer children. Moreover, the skewed gender ratio in giants China and India imply that their reproductive capacity is significantly lower than headline fertility numbers suggest.
- For most major economies, the workforce will be either stable or falling over the next three decades. East Asian countries like China, Japan and South Korea will suffer sharp declines. In contrast, India will enjoy workforce growth into the 2040s. This will have important implications for the economic geography of the 21st century.
- Aging societies will respond by extending working lives. Many readers of this report will be both healthy and working at the age of seventy.
and population dynamics have come back in fashion in recent years as companies
and policy makers have begun to worry about the consequences of rapidly aging
societies. However, till now, much of the discussion was based on data
collected a decade ago. Most countries in the world collect population data
through a general census at the beginning of each decade. The latest census was
conducted in 2010 or early 2011 and ,over the last year, major countries like
China, India and the United States have published all or some of the data.
Although the evolution of population dynamics is largely along expected lines,
the pace of change has been surprisingly quick. This has important implications
for how we think of the future of individual countries as well as of the human
race as a whole.
conventional view as expressed by the UN Population Division latest forecasts
(revisions published in 2011), is that world population will hit 7 billion in
2011, 9.3bn in 2050 and will be over 10 billion by the end of this century.
It also forecasts that India will surpass China as the world’s most populous
country before 2025 and will peak at 1.72bn in 2060. In my view, however, world
population will stabilize decades before 2100 and at a much lower level.
for instance the population count for China. The official census shows that the
country’s population stood at 1.34 billion in 2010 which is some 15-20 million lower than most demographers, including the UN, were earlier
Birth rates have been low in developed countries for some time but they are
declining very rapidly across emerging world, especially when adjusted for the
gender imbalance in some countries. As we shall discuss, even India may soon
have an effective fertility rate that is close to replacement level. It looks
like the human species, reproductively speaking, will stabilize by early in the
next decade. Overall population will continue to grow for some time because of
momentum but this will increasingly be driven by the fact that we are living
longer. Thus, future population growth
would not be derived from reproduction and fertility but from health and
longevity. Eventually, the gains from longevity will peter out (even allowing
for medical advances), and the fall in fertility would triumph.
grow is not a new thing and human numbers have been increasing since the
species emerged in Africa around 200,000 years ago. However, the sustained
population boom of the last two centuries is on a different scale from anything
experienced before. In order to appreciate this, let us consider how
demographics have evolved over the last two millennia. According to Angus Maddison,
total world population stood at 231 mn in 0 AD with
India accounting for 75 million and China for 57 million. At this stage, the
most populous European country was Italy, at the heart of the Roman Empire,
with 7 million. Germany had 3 mn, France 5mn and the
United Kingdom had a mere 0.8mn (all data using present day borders).
the next thousand years, world population grew only marginally to 268 mn but by 1500 AD, despite wars and plagues, population had
risen to 438mn. India’s population at this stage stood at 110 mn and China at 103mn. From here, growth rates accelerated
in Europe and in China. By 1820, even as the Industrial Revolution had taking
off in Britain, the overall global population stood at 1bn with China alone
accounting for 381mn. India’s population had also grown but beset by internal
wars and political uncertainty, it was now a distant second at 209 million.
Note that at this stage, Britain’s population of 21mn was more than double that
of the United States.
Table 1: World Population 0-2010 AD
The World Economy: A Millennial Perspective, Angus Maddison,
OECD 2001; UN Population Division; various national census data
was during the nineteenth century that population growth rates shifted up by an
order of magnitude. Improvements in medicine, public health and in productive
technology allowed mankind to dramatically lower death rates. China and India
saw accelerated population growth but it was Europe that experienced the
biggest gains. Despite losses from two world wars, Germany’s population jumped
from 25mn in 1820 to 68mn in 1950 while the United Kingdom saw its population
rise from 21mn to 50mn. Note that these numbers understate the European
population boom because large numbers emigrated to the Americas and to various
colonies. The United States saw its population jump from 10mn in 1820 to 150mn
in 1950! Similarly, Latin America saw its number rise from 21mn to 165mn.
growth accelerated further in the second half of the twentieth century.
However, the source shifted from the developed West to the relatively
underdeveloped East. We tend to think of Japan as a country of aging and
declining demographics but for the twentieth century as a whole, it was a star
performer. Its population rose from 45mn in 1900 to 84mn in 1950 and then to
127 mn in 2000 before stabilizing. China and India,
both newly formed republics in 1950, had 547mn and 359 mn
people respectively. Even then, they were the two largest populations in the
world but their relative share of world population was much reduced compared to
their history. Nonetheless, both countries have experienced significant
expansion in the last sixty years. The latest census numbers show that India
now has a population of 1.21 bn while China has
1.34bn. What is interesting, however, is that growth rates are now declining
rapidly across Asia and indeed across the world.
theme that is common to the latest census data for almost all countries is that population growth is slowing for almost all
countries. The population growth rate of the United States during the decade of
2000-2010 was 0.9% per annum, down from 1.2% during the nineties. In
comparison, Japan and Germany saw almost zero population growth during the last
decade. Nonetheless, it is the emerging economies that have seen the most
dramatic deceleration in population growth. China saw its population growth
rate fall to 0.56% per annum over the last decade compared to a rate of around
1% in the nineties and over 2% in the sixties and early seventies. Similarly,
India’s population growth rate fell to 1.6% from a peak of 2.3% in the
seventies. The growth rate for the last decade in Brazil was 1.1% and for Russia
minus 0.4%. Note that these are averages for the last decade and the current
pace is significantly lower in almost all cases.
its simplest, demographic dynamics is about the relative relationship between
birth rates and death rates. Typically, death rates fall first as people live
longer due to improvements in nutrition, public health, medicine and so on.
Birth rates fall more slowly when social attitudes gradually change, especially
for women. The chronological gap between the two rates causes a population
boom. Over time, however, the birth rate catches up and, in most developed
countries, keeps falling past the level required to stabilize population. As
being witnessed now in Japan, the population then ages rapidly and shrinks in
us look at how this cycle played itself out over the last two hundred years.
For most of history, the years of life expected at birth were around
24-28years. This began to change in Europe from the late eighteenth century. By
1820, life expectation in the United States and many Western European countries
has drifted up to 37-40 years range. It then drifted up to the 47-50 years
range by 1900 and further to 65-70 years range by 1950. In contrast, the life
expectancy in India and China barely budged from the pre-industrial equilibrium
till well into the twentieth century. In 1950, China had a life expectation of
41 years and it may have been as low as 38 years in India. They now stand at
around 74 and 65 years respectively. Both have some more scope for improvement
as life expectancy is now in the late seventies or early eighties in most
Table 2: Life Expectation at Birth
The World Economy: A Millenial Perspective, Angus Maddison, OECD 2001; UN Population Division
decline in birth rates also began in Western Europe at the time of the
Industrial Revolution. Many interrelated changes affected this – urbanization,
attitudes, aspirations, literacy, female work participation and so on. France
was the first place where this change took place. The number of births per 100 population dropped from 3.2 in 1820 to 2.2 in 1900. Other
Western Europeans followed soon. Today, the birth rate per 100 stands at around
1 for most Western European countries. The United States had a much higher
starting point and, despite sharp declines, still has a level higher than for
most developed countries. In contrast, Japan had a relatively high birth rate
of 3.24 in 1900 but now is at a mere 0.75 – one of the lowest in the world.
useful way to think about trends in birth rates is to look at what is called
the Total Fertility Rate (TFR). This is the average number of live births per
woman over her lifetime. It is usually estimated by sampling women of child
bearing age (usually defined as 15-44 years).
In the long run, a population is said to be stable if the TFR is at the
“replacement rate”. This is usually said
to be 2.1 births per woman but in reality only developed countries can hope to
keep their population stable with such a level. For developing countries, the
required replacement rate is much higher because factors such as infant
mortality and maternal deaths at childbirth. Thus, the replacement level of TFR
is a little above 2.3 for the world as a whole.
TFR for most developed countries now stands well below replacement levels. The
OECD average is at around 1.74 but there are countries like Germany and Japan
that produce less than 1.4 children per woman.
According to the OECD’s latest estimates, South Korea has a TFR of barely 1.15
– a level that foretells rapid aging and a sharp decline in population from the
2020s. However, the biggest TFR declines in recent years have been in emerging
economies. According to the UN’s population division, the TFR in China and
India were 6.1 and 5.9 respectively in 1950.
The ratio has now fallen to 1.8 in China due to the aggressive one-child policy
and to 2.6 in India due to a steady change in social attitudes. Similarly,
Brazil’s TFR has fallen to 1.7 from 6.2 in 1950. These are large declines but
there is reason to believe that the underlying dynamics are driving actual
birth rates down even faster than suggested by the headline TFR.
Table 3: Total Fertility Rate
Society at a Glance 2011: OECD Social Indicators; UN Population Division
and, to lesser extent, India have skewed gender ratios. The Chinese census
suggests that there are 118.6 boys being born for every 100 girls, worsening
from 116.9 in 2000. Similarly, India has a gender ratio at birth of around 110
boys for every 100 girls with large regional variations. Compare this with the
“natural” ratio of 105 boys per 100 girls (notice that even the natural ratio
is not exactly 1:1). A cultural
preference for boys is usually held responsible for the deviation. Since it is
women who give birth and not men, the future scarcity of women implies that the
effective reproductive capacity for both countries is below what is suggested
by the unadjusted TFR reading. After making the adjustment for the gender
imbalance, China’s Effective Fertility Rate (EFR) is around 1.5 while that for
India is around 2.45 – both below what is widely discussed.
In other words, the Chinese are already far from replacing themselves while the
Indians are only slightly above the replacement rate.
make the same adjustment for the world’s fertility rate, we now have an EFR of
around 2.4 which is almost at the replacement rate. In our view, the human race
will no longer be replacing itself by the early 2020s. Population growth will
continue for a few more decades because of momentum from the age structure and
people living longer but, reproductively speaking, our species will no longer
be growing. This will be one of the most important turning points in history.
Figure 1: World Total Fertility Rate Map
UN Population Division
is the spatial manifestation of the process of economic development because all
development is essentially about shifting people out of subsistence farming
into other activities. This is why virtually all present-day developed
countries have been through a phase of urbanization. As the Industrial
Revolution was taking off in 1800, the share of urban population stood at
England and Wales stood at 20% of total population.
In relatively backward Germany, the share was barely 5.5% while it was only
3.8% in China. Industrialization in western Europe
caused urbanization and large-scale rural-to-urban migration and, by the last
decade of the nineteenth century, Britain had an urban majority of 62% and
newly industrializing Germany was at 28%. China’s had barely budged to 4.4%.
world’s urban population exceeded the rural for the first time in 2010. Most
high-income and many middle-income countries are now overwhelmingly urban. The
UK is 80% urban while the US is 82% urban.
There some interesting regional/national patterns. In general, Latin America is
much more urban that one would expect for its level of development. Brazil and
Argentina, both middle income countries, are 86% and 83% urban. Similarly,
Russia is 73% urban. In contrast, rich Japan is only 67% urban with
disproportionate share of its urban population concentrated in a single city,
Table 4: Urbanization Rates Since 1800
The World Economy: A Millennial Perspective, Angus Maddison,
OECD 2001; World Urbanization Prospects 2009; Deutsche Bank estimates
2010 census data shows that China’s urban population is 666 million or 50% of
the overall population, an increase of 14 percentage points since 2000 on top
of the 10 percentage point increase in the 1990s. In contrast, India is still
overwhelmingly rural. The preliminary data for India’s latest census does not
yet provide data on urbanization but it is likely that the proportion will have
risen to around 33%, up from 28% in 2001. Moreover, the process is gathering
pace and we expect India to have an urban majority by 2040. This implies that
urban India will have to absorb more than 300 million additional people. Note
that urbanization has a large impact on fertility. The TFR for urban India is
already below the replacement at 2.1 and, therefore, acceleration in
urbanization will further dampen the country’s population trajectory.
already mentioned, the conventional view as expressed by the UN’s population
division’s latest projections suggest that world population will rise from
around 7 bn in 2011 to 9.3bn in 2050 and then further
to 10.1bn by 2100.
This is based on two expectations (a) global life expectancy will rise from the
current average of 68years to 81years (i.e. matching the best developed countries
of today); (b) all countries will converge on replacement level fertility. Even
if we accept the first assumption, the second assumption is somewhat
unreasonable given that no major country thus far has stabilized its fertility
rate at the replacement rate. Even France and Sweden, much touted for having
pushed up birth rates in recent years, have not yet sustained replacement
levels. Thus, the assumptions are akin to saying that we expect everyone on the
planet will live as long as the present-day Japanese but with Indian fertility
rates and Scandinavian gender ratios. Of course this is a possible outcome and
perhaps even an ideal to some, but unclear if it should be taken as the
shown by the repeated experience, birth rates can fall precipitously as a
country becomes developed. Yet, the UN forecasts that Nigeria’s population will
rise from today’s 160mn to 730mn in 2100. Surely, even the Nigerians will
notice that things are getting somewhat crowded and will alter behavior.
problem with forecasting over long periods of time is that very small
differences in fertility rates can cause very different outcomes over time. For
instance, if the global fertility rate converges to 1.6 (the present day
European average), the UN’s own model shows that world population would hit
8.1bn in 2050 and then drop to 6.2bn by 2100. This is 800mn below current
levels and 4bn below the UN’s central forecast. Given the sharp declines in
fertility that we are witnessing in emerging markets, this scenario is no less
likely than the median view of the UN’s demographers. My view is that the
likeliest scenario is somewhere in between with the world population stabilizing
below 9bn in the late 2050s and then declining. India will still bypass China
in the 2020s to host the single largest human population but it will stabilize
at around 1.55bn in the early-2050s. This is a full decade and 170mn below the
UN’s baseline view. Changing attitudes, rising literacy and, most importantly,
urbanization will play a key role in lowering birth rates in the country over
the next few decades.
does all this mean for the world’s labour supply? No matter what one thinks about long term
fertility, there are several things that are clear from the existing
age-structure. For most major economies, the labour force (i.e. defined as
those of working age 15-64years) has already peaked or is close to peaking.
Germany, Japan and Russia already have a declining workforce. Russia has the
additional and very unfortunate problem of high death rates among working-age
males. The life expectancy for men in Russia is 62 years compared to 74 years
for women. Brazil will see significant workforce growth this decade but it will
peak by the late 2020s before declining. The US will be one of a handful of
developed countries with a growing workforce but this will be based partly on
continued immigration. Even this may not be as easy as in the past because many
of the source countries are growing richer and are themselves seeing rapid
declines in birth rates.
aging of China is probably the fastest in history. The head of China’s National
Bureau of Statistics, Ma Jiantang has been quoted
saying that the 2010 census showed that the share of population aged 14 years
or below is now 16.6%, down 6.3 percentage points from 2000. This is a very
sharp drop and will show up in workforce growth in the next decade. Indeed,
China’s workforce will peak in the next few years and will decline through the
2020s before collapsing in the 2030s. Will relaxing the one-child policy help?
In our view, it may have some positive impact in the very long run but China is
already past the tipping point because of a combination of gender imbalance and
a very skewed age structure. The number of women of
child bearing age (15-49 years) in China will drop 8% between 2010 and 2020,
another 10% in the 2020s and, if not corrected, at an even faster pace
thereafter. Thus, China will have to withdraw an increasing proportion of its
female workforce and “deploy” it for reproduction and childcare. Even if such
social engineering was possible today, we conclude this will actually worsen
the problem of shrinking labor force for decades.
estimates suggest that this leaves India as the only large economy that has a
workforce that is growing in sufficient scale over the next three decades to
balance the declines expected in other major economies. As shown in the table
below, the number of people of working age in India will rise sharply over the
next thirty years. Moreover, this growing workforce is getting better educated.
The latest census showed that the country now had a literacy rate of 74%, far
from ideal but a significant improvement from to 65% in 2001. It is beyond the
scope of this report to discuss whether or not India will be able to create a
policy framework that takes advantage of this demographic dividend. It cannot
be denied, however, that the opportunity exists and will be in place for a long
Table 5: Global Workforce Projections
UN Population Prospects: 2010 revision; Deutsche Bank estimates
are other countries that should also witness growing workforces in the next few
decades. These include Indonesia, Nigeria, Philippines and Bangladesh. The
working age population of Indonesia, for example, should rise from the current
level of 162mn to peak at around 190mn in the mid-2030s before declining. Notice
the difference between eastern and southern Asia. South Korea, for instance, will see its
working age population drop from today’s 35mn to 28mn over the next three
conclude, the message from the latest census data is clear. The pace of falling
birth rates and aging is very fast worldwide and will become the dominant
social and economic factor for the next generation. Much has been written about
the implications of this for politics, pensions, health-care and immigration. A
detailed discussion of these issues is beyond the scope of this article but it
would not be too much to say that many of the readers of this report will be
both healthy and working at the age of seventy.