South Korea’s total fertility rate hit 0.72 last year. Japan’s hovered around 1.2. Sweden, long held up as a model for making work and family life compatible, has watched its own rate tumble faster than almost anyone anticipated. Across the developed world, governments are spending billions on baby bonuses, extended parental leave, subsidised childcare — and yet the numbers keep sliding downward. The panic is palpable.
Perhaps it’s misplaced. A new analysis published in Nature Human Behaviour argues that not only is persistently low fertility likely to continue, but that under the right conditions it could actually improve economic wellbeing rather than undermine it.
Guillaume Marois of Shanghai University and the International Institute for Applied Systems Analysis in Laxenburg, Austria, came to this conclusion after noticing that a widely cited demographic prediction had quietly stopped working. Back in 2009, a landmark study in Nature suggested fertility would eventually rebound in the world’s most developed nations — that once countries crossed a certain threshold of human development, having children would become more appealing again as gender equality improved and social support expanded. For a while, the data seemed to back this up.
It no longer does. Using figures through to 2023, Marois and his IIASA colleague Wolfgang Lutz found that the relationship has flipped back. Today, the higher a country scores on the Human Development Index, the lower its birth rate tends to be. No rebound. No floor. Just a continuing slide. “This finding came as a surprise to much of the demographic community,” says Marois. “Even countries once considered models for balancing work and family life, such as the Nordics, have experienced unexpectedly steep fertility declines. The idea that development alone will bring fertility back up simply doesn’t hold anymore.”
So the demographic transition — that old story of populations moving from high mortality and high fertility to low levels of both — may not end where we thought it would. For decades, demographers assumed birth rates would eventually stabilise around 2.1 children per woman, the so-called replacement level. That figure is built into UN population projections. It has become a kind of shorthand for demographic health, the number politicians invoke when they fret about shrinking workforces and creaking pension systems.
Marois and Lutz think this is roughly the wrong way to look at it. Replacement-level fertility is, in their framing, an artificial construct — one that only leads to long-term population stability under conditions that don’t really exist (namely, no further decline in mortality and no migration). More importantly, a stable population doesn’t automatically mean a prosperous one.
What matters more than raw population size, they argue, is population structure: specifically, the balance between people generating income and people depending on it. A smaller number of workers isn’t necessarily a problem if those workers are better educated, more productive, and equipped with more capital per person. Fewer children today means less pressure on public services for the next two decades, freeing up investment for the education and training that raise long-run productivity. The dependency burden that ageing eventually creates can be, it turns out, partially offset by these gains — and in ways that persist for surprisingly long.
The projections for China are striking. Under a scenario where total fertility stays at roughly 0.8 — well below even current rates in most developed nations — the total dependency ratio remains lower than under a moderate fertility scenario (about 1.7) until around 2050. That’s a long runway. Even accounting for the accelerating ageing that follows, a productivity-adjusted measure of dependency shows no major deterioration through 2070. This conclusion draws on a broader body of work examining age-specific income and consumption patterns across 40 countries, which consistently points to fertility somewhere around 1.5 — or even lower — as the level that tends to maximise per capita consumption in high-income economies.
None of this means pro-natalist policies are pointless. Better childcare, more flexible working, stronger parental leave — these can improve family wellbeing in tangible ways. The trouble is that such measures have, historically, a fairly modest effect on birth rates themselves. “Our message is not that low fertility is inherently good or bad,” says Lutz. “There is no single ‘ideal’ fertility level that guarantees prosperity. Instead of trying to push birth rates back to an arbitrary target, governments should focus on adapting social security systems to the changing demographic realities and invest strongly in education and productivity. Under those conditions, societies can thrive even with fewer births.”
That’s a harder sell politically than a baby bonus. But the arithmetic may leave little choice. South Korea, Japan, and China face perhaps the most intense pressure of any nations on earth to push their numbers back up — and if Marois and Lutz are right, the energy spent on that pressure might be better directed elsewhere: towards pension reform, labour force participation, the kind of long-run investment in human capital that actually moves the needle.
There’s a certain irony in all this. For most of human history, more people meant more power — more soldiers, more labourers, more taxpayers. The instinct to treat falling birth rates as crisis runs deep. But the economy of the twenty-first century runs less on headcount than on what each head can do. That might, eventually, be the more important number.
Study link: https://www.nature.com/articles/s41562-026-02423-6