Lower birth rates bring economic benefits but raise short-term inequality

As a country’s birthrate declines, people of working age make up a larger share of the population, which can fuel economic improvement. But a new study by Harvard School of Public Health researchers finds that lower birthrates raise income inequality within countries in the short-term; the birth rate of the wealthy begins to decline first and, according to the researchers, they are the first to reap the benefits of demographic change.

Over the past 20 years, the average number of children fell by about 50% more in the richest households than it did in the poorest, they found. The middle class and the poor begin to catch up as women in those groups gain access to education and family planning, according to the study. Then, as the number of dependent children in those households goes down, the economic benefits of the “demographic dividend” are spread more evenly across the population.

The study, written by David Bloom, Clarence James Gamble Professor of Economics and Demography, David Canning, Richard Saltonstall Professor of Population Sciences and Professor of Economics and International Health, Gunther Fink, assistant professor of international health economics, and Jocelyn Finlay, research scientist, was the subject of an August 11, 2012 article in The Economist.

Read the working paper and additional coverage in The Economist online.

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Department of Global Health and Population