The implications of below replacement fertility for labour supply and international migration, 2000-2050

Abstract

Fertility rates have been low in almost all advanced countries for the past 25-30 years. In most cases throughout this period, fertility has been below the level that leads to replacement of one generation by the next. In the same period, mortality rates have also fallen sharply. The well-known consequence of this combination is rapid ageing of the population. The rate of ageing will step up a gear in the next 30 years as the baby-boom generation moves into the older ages. A common concern is that a future labour force may not be able to support the rapidly growing aged population. This is a relative concept and its severity is measured by relative indicators, such as the ratio of the number of retired aged persons to the size of the labour force. Considerable attention has been directed to the policy implications of ageing, a recent example being the OECD’s (1998) publication, Maintaining Prosperity in an Ageing Society. However, much less attention has focused on another important outcome of sustained low fertility. As we show below, most advanced countries are facing either stagnation or a fall in the absolute size of the labour force if current demographic and labour force trends continue. In this paper, we examine future trends in labour supply in 16 countries. We consider the impact on future labour supply of changes from current levels of fertility, migration and labour force participation. The sixteen countries are chosen to display a range of differing current circumstances. Outcomes were related to the relative rankings of current levels of fertility, migration and labour force participation as shown in Box 1.