The End of Economic Growth? Unintended Consequences of a Declining Population

By Charles I. Jones. The American Economic Review, 2020

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In many models, economic growth is driven by people discovering new ideas. These models typically assume either a constant or growing population. However, in high income countries today, fertility is already below its replacement rate: women are having fewer than two children on average. It is a distinct possibility that global population will decline rather than stabilize in the long run. In standard models, this has profound implications: rather than continued exponential growth, living standards stagnate for a population that vanishes. Moreover, even the optimal allocation can get trapped in this outcome if there are delays in implementing optimal policy. (JEL I12, J11, J13, O41)

Subfields: Management, Monitoring, Policy and Law, Sociology and Political Science

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