Population economics has been a greatly ignored field of study, especially when it comes to deriving solutions for an economic crisis, which many countries have been fighting against since the recent recession. Most of the focus has traditionally been on making strategies around financial regulation, unemployment and monetary policy, even though population can easily prove to be a crucial game-changer by providing a valuable resource in a struggling economy.
A United Nations report published recently argued that the world’s population was not going to peak anytime soon, as had been predicted previously, and that there was an 80% chance that it will rise to 12.3 billion (from the current 7.2billon) by the year 2100. It is likely that highly populated regions of South Asia and Africa will see higher rates of population growth, leading to further reduced standards of living. On the other hand, the well-to-do countries of the West and parts of eastern Asia will likely face a shortage of young workers, which can have an adverse impact on their economic growth.
One example of a country facing challenges due to a declining work force population is Japan. The country has had an excellent economic growth rate, however, of late it is struggling with trade deficits. This can be pinned down to Japan’s work force population, which has been witnessing a decline since 1997. The increasing numbers of retired people are having to be supported by a smaller number of younger people, thus causing a decline in national savings and diverting resources from economically productive activities. Other nations who are likely to face similar economic problems due to declining populations are South Korea, China and Italy. China’s one child policy will make it increasingly difficult for a young couple in the future to support two sets of parents and their own children all on their own. Similarly an ageing Italian population can hardly be foreseen to lift the nation out of its current state of economic stagnation.
A possible solution to the global population problem can be attained through immigration, whereby developed but underpopulated countries deficient in a young workforce introduce policies to absorb people from overpopulated regions of South Asia and Africa. However, this is easier said than done as many nations have prejudices against foreigners, and the immigrant population may also not find it easy to acclimatize in new lands. Moreover, where there is a requirement for a highly-skilled workforce, immigrants with weaker educational backgrounds may not be found suitable.
Some economists have argued that those developed countries that can successfully absorb immigrants will thrive in the future, empowered with a young workforce, whereas those nations which are too nationalistic and follow conservative immigration policies will likely find their economies stagnating due to declining populations.
However, immigration is not the only solution for countries with declining populations. Several governments have started policies encouraging their people to bear more children – by offering flexible working conditions and manageable costs of living. Japan has been experimenting with both possible solutions, but hasn’t reached far yet with either of them.
Nevertheless, countries that are positively considering population as an important factor affecting economic growth are now developing policies to encourage more child births. These include Singapore, France and Israel, with several more likely to follow. The United States, however, has been ignoring the issue so far. Equipped with a moderately increasing population growth rate, the US may have overlooked some key problems that could arise in the near future due to a possible decline in fertility rates and reduced childbirths, possibly due to relatively unfriendly workplace policies. Moreover, policies that increase immigration will definitely not be on the agenda for the conservative Republicans, who took over the Congress during the recent elections. This can has serious repercussions on the country’s working age population in the future.