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Each spring, as reliably as the changing of the seasons, Japan releases grim new population data that prompts handwringing in the press and vows by politicians to address the country’s demographic crisis.

It’s “now or never” to tackle declining births and the shrinking population, the country’s leader warned last year – nearly eight years after his predecessor had pledged to “confront the demographic problem head on.”

This year is no exception. The number of new births fell for an eighth consecutive year in 2023, reaching a record low and representing a 5.1% decline from the previous year, according to preliminary data released this week by the government.

The demographic crisis has become one of Japan’s most pressing issues, with multiple governments failing to reverse the double blow of a falling fertility rate and swelling elderly population. More people are dying than being born each year, causing the population to fall rapidly – with far-reaching consequences for Japan’s workforce, economy, welfare systems and social fabric.

Japan is far from the only country with this problem. Its East Asian neighbors, including China, Hong Kong, Taiwan, and South Korea face similar issues, as do several European nations such as Spain and Italy.

A day after Japan released its preliminary data this week, South Korea released its own figures showing its fertility rate – the world’s lowest – dropped yet again in 2023.

Unlike many developed countries with low fertility rates, such as the United States, Japan and other East Asian nations have shied away from using immigration to bolster their population.

But Japan’s crisis is unique in that it’s been decades in the making, experts say – meaning its impact is particularly evident now, with relief unlikely to come anytime soon. So whatever path Japan takes will likely offer a roadmap for other countries facing unchartered territory, and a glimpse into their potential future.

‘Not reversible’

The first thing to understand about Japan’s population crisis is that it’s only partly behavioral, said James Raymo, professor of sociology and demography at Princeton University.

A much bigger part of the problem has to do with Japan’s history and how that has shaped its population structure, he said.

For a population to remain stable, it needs a fertility rate of 2.1, defined as the total number of births a woman has in her lifetime. A higher rate will see a population expand, with a large proportion of children and youth, as seen in India and many African nations.

But in Japan, “that measure of fertility has been below 2.1 for 50 years,” Raymo said. It fell below that level after the 1973 global oil crisis pushed economies into recession, and never climbed back up.

As of last year, Japan’s fertility rate sat at 1.3. It has stayed relatively flat for a while, meaning the average Japanese woman today is having roughly the same number of children as five or 10 years ago.

The real problem is that the fertility rate has been consistently low for so long. A country can recover if that rate only dips for a few years – but when it stays under 2.1 for decades, you get a population with much, much fewer young people than older adults.

Because of that skewed ratio, the total number of babies being born each year will continue to fall – even if women start having more kids – because the pool of women of childbearing age is already so small, and shrinking each year.

“It has to continue – it cannot not continue,” Raymo said. “Even if all of a sudden Japanese married couples started having three children on average … the population would continue to decline. The number of births would, for a while, still continue to decline. It’s not reversible.”

That means even if Japan manages to boost its fertility rate dramatically and immediately – which experts say is unrealistic – its population is bound to keep decreasing for at least several more decades until the skewed ratio balances out, and the babies being born now reach childbearing age themselves.

Official projections echo this prediction. According to models by the government’s Institute of Population and Social Security Research (IPSS), which were most recently revised last year, the population will fall 30% by 2070. At that point, the number of people age 65 and over will account for 40% of the population, it forecast.

What we’re seeing now “is zero surprise … and it will structurally continue for the foreseeable future,” Raymo said.

‘Drifted into singlehood’

There are many reasons for Japan’s low fertility rate – but the main problem is that people aren’t getting married in the first place, Raymo said.

Single parents, or children born to unmarried mothers, are far less common in Japan than many Western countries. Thus, fewer marriages means fewer babies overall.

The number of marriages in Japan declined nearly 6% in 2023 from the previous year – dipping below 500,000 for the first time in 90 years, according to the preliminary data released this week. Divorces also rose 2.6% last year.

A couple poses for a wedding photograph near blossoming cherry trees in the Yonomori area of Fukushima, Japan, on April 2, 2023. Tomohiro Ohsumi/Getty Images

Experts have pointed to Japan’s high cost of living, stagnant economy and wages, limited space, and the country’s demanding work culture as reasons fewer people are opting to date or marry.

Japanese people’s “willingness to form a family … has declined considerably,” according to a 2022 survey by the IPSS. Among single adults who have never wed, fewer say they intend to get married compared to previous years – while more say they wouldn’t be lonely even if they continued living alone. About one third said they did not want a relationship.

For women, economic costs are not the only turn off. Japan remains a highly patriarchal society in which married women are often expected to take the caregiver role, despite government efforts to get husbands more involved.

For all these reasons, many people are “ambivalent about marriage,” postponing it for years – “and then they’re 35, they’re 40, and they’ve sort of drifted into singlehood,” Raymo said.

Many of these issues are also plaguing other East Asian nations with their own population woes. Marriage rates have plummeted in China, where women are more educated and financially independent than ever. In South Korea, only one third of young people feel positively about marriage, according to polls, with many saying they don’t have enough money for marriage or feel it’s simply not necessary.

Most East Asian nations have also declined to legalize gay marriage, parenting and adoption rights, making it far harder for LGBTQ citizens to become parents.

What does Japan’s future look like?

The impact of the population crisis is evident.

Industries are feeling labor shortages; jobs are hard to fill, with fewer young adults entering the workforce; some rural communities are dying out, with one village that went 25 years without any new births.

Even in cities, things are changing – with many service jobs occupied by young immigrants, or students from countries such as China or Vietnam, Raymo said.

The government has spent years pushing various initiatives to encourage marriage and childbirth, such as enhancing child care services or offering housing subsidies. Some towns are even paying couples to have kids.

But given the decline is expected to continue for at least several decades, Japan will likely feel the blow to its pension and health care systems, and other social infrastructure that is difficult to maintain with a shrinking workforce.

Businessmen walk towards Shinjuku station in Tokyo. Stanislav Kogiku/SOPA Images/LightRocket/Getty Images

That’s not to say Japan is doomed, Raymo asserted – the fertility rate will likely even out at some point, and the country will adjust. But that will take time, and Japan needs to prepare itself for “a really bumpy ride to a new equilibrium.”

There are a few ways that ride could play out. We could see a “massive mechanization of society,” meaning human labor being replaced by machines, Raymo said. As the population falls, some problems like the high cost of living, or overcrowding in Toyko could begin to ease. One theory suggests that fewer people means less competition for things like university admission and jobs.

But for now, this is all speculation. No country has been in this position before. And, Raymo said, the “only likely large-scale response” the government can implement is “mass immigration on a level Japan has never experienced.”

Immigration is a controversial issue in Japan, a largely conservative country that perceives itself as ethnically homogenous. It has historically failed to integrate previous waves of foreign workers and has instead relied on temporary fixes such as employing foreigners on student visas. Foreign residents and Japanese nationals of mixed ethnicity have long complained of xenophobia, racism and discrimination.

Japan may not have a choice, however. A 2022 report by a Tokyo-based research organization found that Japan needs about four times as many foreign workers by 2040 to achieve the government’s economic goals.

And authorities have shifted that direction in recent years, creating new visa categories and considering proposals to allow certain types of skilled workers to stay indefinitely. The IPSS’ models predict that by 2070, “the pace of population decline is expected to slow down slightly, mainly due to the increase in international migration.”

Decades down the line, the new Japan “might be a slightly poorer country, and a slightly less generous country in terms of policy support for elderly and families,” Raymo said.

“I can imagine a much smaller and a much different Japan,” he said. “But I don’t imagine an empty Japan.”

Dependency and depopulation? Confronting the consequences of a new demographic reality (82 pages) Technical appendix (8 pages)

At a glance

Falling fertility rates are propelling major economies toward population collapse in this century. Two-thirds of humanity lives in countries with fertility below the replacement rate of 2.1 children per family. By 2100, populations in some major economies will fall by 20 to 50 percent, based on UN projections.

Two-thirds of humanity lives in countries with fertility below the replacement rate of 2.1 children per family. By 2100, populations in some major economies will fall by 20 to 50 percent, based on UN projections. Age structures are inverting—from pyramids to obelisks—as the number of older people grows and the number of younger people shrinks. The first wave of this demographic shift is hitting advanced economies and China, where the share of people of working age will fall to 59 percent in 2050, from 67 percent today. Later waves will engulf younger regions within one or two generations. Sub-Saharan Africa is the only exception.

The first wave of this demographic shift is hitting advanced economies and China, where the share of people of working age will fall to 59 percent in 2050, from 67 percent today. Later waves will engulf younger regions within one or two generations. Sub-Saharan Africa is the only exception. Consumers and workers will be older and increasingly in the developing world. Seniors will account for one-quarter of global consumption by 2050, double their share in 1997. Developing countries will provide a growing share of global labor supply and of consumption, making their productivity and prosperity vital for global growth.

Seniors will account for one-quarter of global consumption by 2050, double their share in 1997. Developing countries will provide a growing share of global labor supply and of consumption, making their productivity and prosperity vital for global growth. The current calculus of economies cannot support existing income and retirement norms—something must give. In first wave countries across advanced economies and China, GDP per capita growth could slow by 0.4 percent annually on average from 2023 to 2050, and up to 0.8 percent in some countries, unless productivity growth increases by two to four times or people work one to five hours more per week. Retirement systems might need to channel as much as 50 percent of labor income to fund a 1.5-time increase in the gap between the aggregate consumption and income of seniors. Later wave countries, take note.

In first wave countries across advanced economies and China, GDP per capita growth could slow by 0.4 percent annually on average from 2023 to 2050, and up to 0.8 percent in some countries, unless productivity growth increases by two to four times or people work one to five hours more per week. Retirement systems might need to channel as much as 50 percent of labor income to fund a 1.5-time increase in the gap between the aggregate consumption and income of seniors. Later wave countries, take note. In confronting the consequences of demographic change, societies enter uncharted waters. Absent action, younger people will inherit lower economic growth and shoulder the cost of more retirees, while the traditional flow of wealth between generations erodes. Long-standing work practices and the social contract must change. More fundamentally, countries will need to raise fertility rates to avert depopulation—a societal shift without precedent in modern history.

Families across the globe are having fewer and fewer children. In much of the world, fertility rates have fallen below the replacement rate required to maintain a stable population, and, despite increasing longevity, some countries have already started to see population decline. Others may follow in the not-so-distant future.

Falling fertility rates shift the demographic balance toward youth scarcity and more older people, who are dependent on a shrinking working-age population. Longer life spans accelerate the shift. This phenomenon has begun to play out across advanced economies and China, where in three-fifths of countries annual deaths already exceed births. Emerging economies have more runway, but they face the need to get richer before the demographic transformation sets in.

Our current economic systems and social contracts have developed over decades of growing populations, in particular working-age populations that drive economic growth and support and sustain people living longer lives. This calculus no longer holds.

A combination of higher productivity, more work per person, effective migration, and higher fertility rates can ensure global prosperity for the future. That said, no one of those levers alone will be enough, and each presents challenges. Bending the trajectory of the demographic shift will require society to rethink existing systems for work and retirement in ways that may compel a change in our social contract—no easy feat.

Acknowledgments The research was led by Anu Madgavkar, a McKinsey Global Institute (MGI) partner in the New Jersey office; Marc Canal Noguer, an MGI senior fellow in the Barcelona office; Chris Bradley, a McKinsey senior partner in the Sydney office and a director of the McKinsey Global Institute; Olivia White, a senior partner and MGI director in the Bay Area office; Sven Smit, a senior partner in the Amsterdam office and MGI chair; and TJ Radigan, an engagement manager in the Greater Boston office. TJ Radigan and Madeleine Idoux, an engagement manager in Paris, led the project team, which included Yacine Radi Benjelloun (alumnus), Hugo Clerget, Mauricio De Zarobe, Lilian Lu, Francesca Pagani, Shreyangi Prasad, and Ananya Sivaraman. We are grateful to Stephanie Strom, senior editor, who helped write and edit the report, and to Juan M. Velasco, senior data visualization editor, who designed the charts. For kindly sharing insights, we thank MGI academic advisers Martin Baily, senior fellow emeritus in economic studies at the Brookings Institution; Hans-Helmut Kotz, resident fellow at the Center for European Studies and visiting professor of economics, both at Harvard University; Rakesh Mohan, president emeritus and distinguished fellow at the Center for Social and Economic Progress; and Sir Christopher A. Pissarides, a Nobel laureate in economics and the Regius Professor of Economics at the London School of Economics. We also thank our former adviser Alan Taylor, professor of international and public affairs at Columbia University and an external member of the Bank of England’s Monetary Policy Committee. We are also grateful to a number of other experts who generously shared their time, perspectives, data, and support. They include Adrien Auclert, associate professor of economics at Stanford University; Jesús Crespo Cuaresma, professor of macroeconomics at WU Vienna University of Economics and Business; Ignacio Fernández-Huertas, director of the budget analysis division, Autoridad Independendiente de Responsabilidad Fiscal (AIReF); Homi Kharas, cofounder and chief economist, and Wolfgang Fengler, CEO, of World Data Lab, along with Matthew Cooper and the rest of the WDL team; Andrew Mason, emeritus professor, department of economics, University of Hawaii, and founding director of the National Transfer Accounts Project; Ció Paxtot, professor of economics, University of Barcelona; Andrés Rodríguez-Pose, Princesa de Asturias Chair and professor of economic geography at the London School of Economics; and Andrew J. Scott, director of economics at the Ellison Institute of Technology Oxford and cofounder of The Longevity Forum. Many McKinsey colleagues gave us valuable input and guidance. We want to thank Rebecca J. Anderson, Tamara Charm, Jeffrey Condon, Gemma D’Auria, Kweilin Ellingrud, Ellen Feehan (alumna), Pragun Harjai, Brad Herbig, Sylvain Johansson, Ahmed H. Khan, Dymfke Kuijpers, Krzysztof Kwiatkowski, Camillo Lamanna, Tarek Mansour, Jan Mischke, Neeraja Nagarajan, Marco Piccitto, Jose Maria Quiros, Jeongmin Seong, Cannon Shipman, Shubham Singhal, Tilman Tacke, Simone Tai (alumna), Nikol Vargas (alumna), and Peixi Wang. In MGI’s publishing team, we would like to thank Rachel Robinson, Rishabh Chaturvedi, Janet Bush, and David Batcheck. In communications, our thanks go to Rebeca Robboy, Nienke Beuwer, Ashley Grant, Crystal Zhu, and Cathy Gui. Thanks also go to McKinsey’s design team, especially Diane Rice, Nathan R. Wilson, and Janet Michaud. We are also grateful for the collaboration of McKinsey’s digital production team, including Mary Gayen, Katie Shearer, Dana Sand, Charmaine Rice, and Regina Small. As with all MGI research, this work is independent and has not been commissioned or sponsored in any way by any business, government, or other institution. While we gathered a variety of perspectives, our views have been independently formed and articulated in this report. Any errors are our own.

This report first explores the demographic shifts driven by falling fertility rates, until recently a trend primarily of interest to demographers and actuaries but now a topic of global conversation. Chapters 2 and 3 provide a comprehensive analysis of the potential economic consequences of falling fertility rates combined with longer life spans. The first wave of aging economies has started to feel the impacts on economic growth, labor markets, consumption, and public finances. Later waves of aging will hit emerging economies, which are expected to face a similar fate just one to two generations later. We conclude with implications and recommendations for policy makers, businesses, and society.

While the global population last declined significantly during the bubonic plague of the Middle Ages, which is believed to have killed roughly half of Europeans, the demographic shift we are living through today is in many ways a result of vast improvements in global health, welfare, and prosperity. Humanity has demonstrated incredible resourcefulness throughout its history, and no doubt will find opportunities to thrive amid the challenges that a worldwide change in demographics poses.

Chapter 1: The age of youth scarcity

As well-being and prosperity increase around the world, two outcomes—fewer children and longer lives—are reshaping global populations. Over the past several decades, families have shrunk in size virtually everywhere. In much of the world today, the total fertility rate, which we refer to as the fertility rate, is below the replacement rate of 2.1, which is the number of children needed to replace their parents. As a result, the global age mix is shifting. While many people call this phenomenon “aging,” in fact the declining number of young people—a youth deficit—is driving the bulk of the demographic shift, a phenomenon we explore in this chapter.

While declining fertility rates and changing population patterns are occurring everywhere, a first wave of regions, generally higher-income ones, has already begun to experience the effects of the demographic shift over the past several decades. Later waves of the same challenge will wash over many emerging economies in the next one to two generations.

Falling fertility is reshaping populations—everywhere

What is the fertility rate? The word “fertility” has a different meaning in the vernacular compared with its use among demographers. Colloquially, fertility often refers to whether a person is able to conceive a child. But demographers focus on fertility rates, a measure of the average number of children women have throughout their life. Measuring the average number of children per woman in any given generation is straightforward once that generation has passed childbearing age. For example, the calculation today is easy for any cohort of women born before about 1970. However, this reflects only old information rather than providing an indication of how many children families are having today or are likely to have over their lives. To characterize the fertility rate in any given year, demographers measure the total fertility rate, which is a so-called period metric. The United Nations measures total fertility rate as the average number of children that would be born alive to a woman during her lifetime, assuming she were to pass through her childbearing years conforming to the age-specific fertility rates in that year. Age-specific fertility measures the number of children that women in each age bracket have in the reference period and is typically collected for five-year brackets ranging from 15 to 50 years. The total fertility rate may differ from what cohort fertility rates ultimately end up being for many reasons—age-specific fertility rates change over time, for example. Fertility rates could be underestimated if younger women today end up having the same number of children as younger women 15 years ago, only later. In this case, the measured fertility rate will fall today, even if the eventual number of children born per woman is the same. Conversely, fertility rates may be overestimated for today’s childbearing cohort if the number of children they have in later adulthood continues to fall relative to older cohorts. Nonetheless, the total fertility rate provides a set of harmonized estimates that can be compared across societies, traced over time, and used to predict population size. Population size is expected to remain flat if the fertility rate is at replacement level, defined by the United Nations as approximately 2.1 children per woman. This represents the average number of children a woman would need to give birth to in order to ensure that she is replaced by a daughter who survives to childbearing age. The true replacement rate also varies across countries and may be slightly higher or lower based on differences in child mortality and sex ratios at birth. In the long run and setting migration aside, the population of a society with a fertility rate above replacement is expected to grow, while the population of one with a fertility rate below replacement is expected to shrink. However, this rule of thumb doesn’t necessarily hold in the short term, since population size also depends on the number of women of childbearing age and life expectancy. There are myriad causes for fertility changes around the world, ranging from societal shifts to deeply personal decisions. In this report, we do not explore the causes of declining fertility rates but rather examine their potential economic consequences. For a discussion of the causes of declining fertility rates, see, for example, Pablo Alvarez, “What does the global decline of the fertility rate look like?” World Economic Forum, June 2022; Nicholas Eberstadt, “The age of depopulation: Surviving a world gone grey,” Foreign Affairs, November/December 2024; and Alice Evans, “Why is fertility collapsing, globally?” The Great Gender Divergence, November 1, 2024.

Today in more than half of the world’s countries, home to two-thirds of humanity, the fertility rate has dropped below the replacement rate of 2.1 children per woman. Globally, the fertility rate averaged 2.3 children per woman in 2023, just over the replacement rate. Over the past quarter century, the fertility rate has declined in 90 percent of the world’s countries (see sidebar “What is the fertility rate?”).

Exhibit 1 A series of world maps illustrates total fertility rates by country in 1950, 1965, 1980, 1995, and 2010 and today. Fertility rates are measured in live births per woman, using data from the United Nations. A color gradient from dark purple to dark blue indicates a range of fertility rates. The first map shows rates in 1950. The fertility rate exceeded the replacement rate of 2.1 in all countries except Luxembourg, at 2.0. Regional fertility rates are shown in circles. The Middle East and North Africa had the highest rate at 6.8, followed by Sub-Saharan Africa at 6.4. Latin America and the Caribbean had a rate of 5.9, the same as Emerging Asia. Greater China had a rate of 5.8, while India had a rate of 5.7. North America had a rate of 3.1 live births per woman. Western and Central/Eastern Europe had the lowest rates at 2.5 and 3.0, respectively, still significantly above the replacement rate. The second world map in the series shows total fertility rates by country in 1965. Serbia and Croatia, both part of Yugoslavia at the time, dropped below the replacement threshold in 1963 and 1968, respectively. Looking at regional rates, the Middle East and North Africa had the highest at 6.8, followed by Sub-Saharan Africa at 6.7. Greater China had a rate of 6.6. Other regions and countries include India (5.9), Latin America and the Caribbean (5.7), North America (3.0), and Advanced Asia (2.8). Western Europe (2.7) and Central/Eastern Europe (2.3) had the lowest rates, still above the replacement rate. The third world map in the series shows total fertility rates by country in 1980. The rates in most countries in Advanced Asia, Europe, and North America are below the replacement rate of 2.1, with the rates in other regions also declining. Looking at regional rates, Sub-Saharan Africa had the highest at 6.8, followed by the Middle East and North Africa at 5.9, and Emerging Asia at 5.1. The fourth world map in the series shows total fertility rates by country in 1995. China fell below the replacement rate in 1991, and rates continued to decline everywhere. Sub-Saharan Africa had the highest rate at 6.0, and Western Europe had the lowest, at 1.4. Rates in North America, Advanced Asia, and Central/Eastern Europe were also below the replacement rate of 2.1 live births per woman. The fifth world map in the series shows total fertility rates by country in 2010. Rates continued to decline everywhere as countries developed. India had the highest rate at 5.7, but that figure would fall below the replacement rate in 2019. The sixth and final world map in the series shows total fertility rates by country today (data from 2023). Rates continue to decline. Greater China’s fertility rate has fallen to just 1.0, and the rate in Advanced Asia is 1.1. Sub-Saharan Africa is the only region of the world where fertility rates are still high today. They are likely to stay above the replacement rate for the next 25 years.

Authors discuss the consequences of a new demographic reality MGI hosted a virtual event on the report’s themes with leading voices.

At the same time, life expectancy has increased almost everywhere. But greater longevity explains just 20 percent of the change in the age profiles of populations in developed countries since 1960; falling fertility rates explain the rest (Exhibit 2).

Consider the combined impact of these two forces in Germany. From 1960 to 2021, 26 million fewer babies were born, a number equivalent to 31 percent of the German population at the end of that period, than if fertility rates had remained constant at the 1960 level. Seven million more seniors, or about 8 percent of the country’s population, were alive at the end of the period due to increased life expectancy over the same period. Net-net, the country’s population in 2021 was 23 percent smaller than it would have been had both fertility and life expectancy rates remained constant, equivalent to roughly 19 million fewer people.

Exhibit 2 A bar chart shows the impact of changes in fertility rate and life expectancy in some developed countries from 1960 to 2021. The impact of greater longevity (additional seniors who would not be alive today had life expectancy not increased) explains only 20 percent of the change in the age profile of the populations. Falling fertility rates (additional people who would have been born had fertility rates not declined) explain the remaining 80 percent. The share of demographic shift explained by declining fertility varies by country in the data sample, with 95 percent in South Korea, 87 percent in the United States, 83 percent in the United Kingdom, 82 percent in Spain, 81 percent in Greater China, 79 percent in Germany, 78 percent in Italy, 77 percent in Australia, 72 percent in France, and 50 percent in Japan.

Japan is the only developed country in our research where life expectancy had roughly the same impact as fertility. This unusual pattern was due to two factors. First, Japan already had a very low fertility rate in 1960—1.98 compared with, for example, 2.7 in the United Kingdom at that time. And life expectancy at 65 increased more in Japan than in other countries—by nine years compared with six years in the United Kingdom.

In emerging economies, fertility rates fell even more dramatically from 1960 to 2023. For instance, a woman had an average of 6.1 babies in Brazil in 1960, whereas today, she has 1.6 children.

Global life expectancy has extended by seven years on average since 1997, reaching 73 years in 2023 and set to hit 77 years by 2050. Centenarians, or those 100 years and older, are the fastest-growing age group in percentage terms, according to the United Nations. Yet for all the attention paid to rising longevity, declining fertility more powerfully determines global demographics.

Populations morph from pyramids into obelisks

Pyramid foundations: Demystifying the approach In this report, we explore the implications of changing demographics by analyzing projected population shifts based on United Nations forecasts. We examine the outcomes across different waves to understand the impact over various time horizons. We have consolidated the world into ten regions to present our findings, and each of the 237 countries and areas in the UN World Population Prospects 2024 is individually accounted for so that global populations sum to the total. Our first wave regions include Advanced Asia (Australia, Japan, New Zealand, Singapore, and South Korea), Western Europe, Greater China, Central and Eastern Europe, and North America. Later waves encompass Latin America and the Caribbean, India, the Middle East and North Africa, Emerging Asia (economies not included in Advanced Asia, India, or Greater China), and Sub-Saharan Africa. Throughout the report, we rely on 20 countries for examples. For first wave regions, those countries are Australia, China, France, Germany, Italy, Japan, South Korea, Spain, the United Kingdom, and the United States. Together, these countries account for 28 percent of global population and generate 65 percent of the world’s nominal GDP. The example countries from later wave regions are Bangladesh, Brazil, Egypt, Ethiopia, India, Indonesia, Mexico, Nigeria, Thailand, and Türkiye. These countries account for 35 percent of global population and 12 percent of nominal GDP. Most of our data sources are publicly available and standardized. The future population projections in this report are based on the medium scenario from the UN World Population Prospects 2024, which covers 237 geographic entities, mostly countries. The report includes population estimates from the 1950s to the present, as well as projections through 2100. Additionally, we have supplemented our analysis with income and consumption data from the National Transfer Accounts Project; labor market data from the International Labour Organization’s ILOSTAT and The Conference Board; and additional information from Eurostat, the OECD, and, where applicable, national statistical offices. We also use consumption data from World Data Lab and supplement our economic analyses with Oxford Economics data, which are not publicly available. Throughout the report, our analysis takes a ceteris paribus approach, holding all variables constant except demographic change, to isolate its effect. Our approach has two key limitations to highlight. First, ceteris paribus outcomes throughout this report are not predictions; rather, they are thought experiments to explore to what degree current economic systems “add up” in future demographic realities and to understand the ways in which they do not. These calculations are not dynamic, but we readily acknowledge that ceteris paribus never holds in practice. For example, we do not consider the impact of aging directly on productivity within countries, on personal savings rates, and so forth. Societies are highly adaptable, and they must and will adapt in ways that our calculations do not attempt to anticipate. In fact, the size of the required adjustment is what we attempt to approximate with our methodology. Second, our sources of data, while robust, have limitations. In some instances, different sources do not agree, and some gaps in the data require interpolation. In some cases, data sources are themselves estimating quantities with a high degree of uncertainty. Even the UN population scenarios, while the closest assessments available to a global consensus view, have their critics (see sidebar “Predicting the future is hard, and demographers don’t agree”).

Due to the demographic shifts we’ve described, what demographers call population pyramids are shaped less and less like pyramids today. To analyze how population structures are shifting over time, we’ve grouped the world’s countries into ten regions: Advanced Asia, Central and Eastern Europe, Emerging Asia, Greater China, India, Latin America and the Caribbean, Middle East and North Africa, North America, Sub-Saharan Africa, and Western Europe (for more on our classification and data, see sidebar “Pyramid foundations: Demystifying the approach”). In most regions, these structures now resemble shallots, and in more economically advanced ones, they are taking on the shape of obelisks (Exhibit 3).

Exhibit 3 A series of population pyramid charts shows projected changes in the population breakdown of ten world regions from 1960 to 2100, measured by gender and age group. The charts show the population in 1960 and 2023 as well as population projections for 2050 and 2100. Each is shown as a light blue area, a thin blue line, a slightly thicker dark blue line, and a gray area. All ten charts show a progressive widening toward the top of the pyramid, with more people in older age brackets. At the beginning, population distributions all show classic pyramid shapes, with a wide base of young people and a narrow top representing older generations. In most regions, the structures now resemble shallots, and in more economically advanced locations, they are taking on the shape of obelisks.

Societies are shaped in large part by their age structures, and their economic priorities shift as their population pyramids invert. The amount of physically intensive work done versus the number of physical therapists needed, or the number of families adding nurseries to their homes rather than adding accessory dwelling units to house aging parents, depends on the mix of younger and older people in a population.

Crucially, pension entitlements kick in between 60 and 67 years of age in many economies, particularly in advanced ones. At that point, seniors become recipients of “support” provided by the working-age population, those aged 15 to 64, who generate most of the income and pay most of the taxes that support older people. Without significant changes, the world’s aging population means a growing number of older people who aren’t working will require the support of a shrinking number of younger people who are. Even if global fertility rates were to jump overnight to the replacement rate, it would take 20 years, give or take, for those additional babies to become adults and begin contributing to economic growth through work.

Working-age populations will peak and fall in three waves

Working-age people account for the bulk of economic output, so their numbers relative to those of older and younger people determine a host of economic outcomes. All regions will see the share of working-age people in their populations decline, although at different paces and points in time. First wave regions are those already undergoing this change. Later wave regions, where the shift is just beginning to take hold or hasn’t yet arrived, will experience a peak and subsequent decline in the share of working-age population in the future—in some cases, the near future.

Among first wave regions are predominantly developed economies—Advanced Asia, Central and Eastern Europe, North America, and Western Europe—and Greater China, which has lower GDP per capita than other first wave regions but shares their demographic characteristics. These regions have an average total fertility rate of 1.2 children per woman today, and 67 percent of their combined population is working age, down from a high of 70 percent in 2010 (Exhibit 4). In aggregate, this cohort is rapidly shrinking in these regions, where the share of the working-age population is projected to drop to about 59 percent by 2050.

There are two later wave groups of regions. A second wave has just reached the shores of Emerging Asia, India, Latin America and the Caribbean, and the Middle East and North Africa. Their total fertility rate is 2.2, and 67 percent of their population is working age today. This wave is still gathering momentum, however, and will peak in the 2030s in aggregate.

In Sub-Saharan Africa, the average fertility rate is 4.4 today, and just 56 percent of the population is working age. This share will continue to grow, peaking at 66 percent well into the second half of the century, when the third wave of the demographic shift hits its shores.

Exhibit 4 A line chart tracks the percentage of the global population aged 15 to 64 from 1960 to 2100, highlighting three distinct waves of working-age population growth. The first wave, depicted in dark blue, includes predominantly developed economies and peaked in 2010. The second wave, shown in teal, represents later waves excluding Sub-Saharan Africa and is projected to peak in the 2030s. A third wave, represented by a dashed teal line, illustrates the trend in Sub-Saharan Africa. This wave shows a consistent upward trajectory, peaking around 2080. Notably, while the first two waves show peaks followed by declines, the Sub-Saharan Africa wave reveals continued growth in the working-age population share throughout most of the 21st century.

The three waves mask variations, and regions, countries, counties, and cities within them are at different stages of the demographic shift. For example, in the first wave, Germany’s working-age population share peaked in 1986, while in the United States and China, it peaked in 2007 and 2010, respectively. China is projected to experience a sharper decline in its working-age population share in the future, given its lower fertility rate and lower migration. The United States and India measure fertility rates at a subnational level, providing examples of how birth rates vary even more within countries. (See sidebar “Fertility rates vary significantly across regions and within countries.”)

Fertility rates vary significantly across regions and within countries Some large nations, such as the United States and India, monitor the total fertility rate at a subnational level, capturing this data by state (exhibit). In the United States, the overall fertility rate is 1.66, according to the US Centers for Disease Control and Prevention. Rates vary by state: South Dakota has a fertility rate of 2.01, just slightly below the replacement level and comparable to that of Indonesia. Texas, the second-most-populous state, has a fertility rate of 1.84. By contrast, Vermont and Washington, DC, have fertility rates of 1.35 and 1.24, respectively, figures that are more comparable to those of Finland or Switzerland. Fertility rates vary even more widely in India. While the national fertility rate stands at 1.98, below the replacement level, about a third of the population resides in states where fertility rates exceed replacement levels. Sikkim, the state with the lowest fertility, is at 1.05, according to the fifth National Family Health Survey. Conversely, Bihar has a fertility rate of 2.98, between Kenya and Botswana. Even within Indian states, fertility rates vary among populations, reflecting urban and rural differences. In Bihar, the urban fertility rate is 2.35, while the rural fertility rate is significantly higher, at 3.11. Thus, while fertility is a national issue for many countries, a subnational approach to addressing falling fertility rates may yield richer results. A choropleth map uses color to illustrate the total fertility rate in each state of the United States (using 2022 data) and in each state of India (using data for 2019 to 2021). In the United States, the total fertility rate is 1.66, with a high of 2.01 in South Dakota and a low of 1.24 in the District of Columbia. In India, the total fertility rate is 2.00, with the highest rate in Bihar at 2.98, and the lowest in Sikkim at 1.05. Overall, the maps show that fertility rates vary significantly even within individual countries.

Nevertheless, the broad momentum and peak of this population cohort in countries within each wave are similar, reflecting the horizons over which they will confront youth scarcity. For first wave regions, the declining share of working-age population is a relatively new development, and many companies, governments, and communities haven’t yet fully come to grips with the implications. Later wave regions, excluding Sub-Saharan Africa, still have time to prepare, but not much.

Support ratios will continue to fall

As the world becomes youth scarce, the number of workers per senior will fall. To illustrate this, we focus on the support ratio—the number of people aged 15 to 64 years, or those of working age, relative to the number 65 years and older.

Exhibit 5 A series of three charts depicts the support ratio, defined as the number of people aged 15 to 64 for every person aged 65 and older, across different regions of the world. The first chart shows the support ratio in 1997. The global support ratio was 9.4, meaning there were more than nine working-age adults for each older person. First-wave, or more developed, regions show significantly lower ratios than later-wave regions. The second chart shows the support ratio in 2023. The global support ratio is down to 6.5 working-age adults for each older person. The last chart in the series shows the projected support ratio in 2050 and illustrates a continued decline. Only 3.9 working-age adults are projected to support each older person.

This trend is starker in first wave economies, where the support ratio is already 3.9 today, down from 6.8 in 1997. The ratio is expected to fall to two working-age individuals for every person over 65 years by 2050. Among regions in the first wave, Advanced Asia, Greater China, and Western Europe will have the lowest support ratios by 2050; the ratio will fall fastest in Greater China.

In later wave regions, the support ratio will decline from 10.3 today to 5.7 by 2050. India, where it is 9.8 today, offers a particularly stark example. In the country currently home to the world’s largest population, the trajectory of birth rates and life expectancy indicates its support ratio will be roughly half what it is today by 2050 and drop to 1.9—about the same as Japan today—by 2100.

First wave countries’ populations have already peaked

The world reached its maximum number of annual births in 2012, when 146 million babies were born, and the global number of births will continue to slowly decline. According to the United Nations, the total number of people on Earth will peak in 2084, at just above ten billion, and start declining in the latter years of this century.

Total population in first wave regions, however, peaked in 2020. On the current trajectory, the population of these regions will fall from 2.8 billion today to 2.6 billion by 2050 and to 1.9 billion by 2100 (Exhibit 6). Only 22 of the 55 countries in these regions will have more people in 2050 than today, and populations in most of those countries will decline thereafter. Already, more people die each year than are born in 37 countries in first wave regions. Today, 60 percent of the world’s population aged 65 and older resides in these regions. By contrast, only 22 percent of those younger than 15 years live there.

Exhibit 6 Four area charts depict global population trends by age group from 1997 to 2100. The first chart illustrates the total world population, which was 8.09 billion in 2023 and is projected to peak at 10.29 billion in 2084, representing an increase of 27 percent. Populations in first-wave (more developed) regions peaked in 2020. Later-wave regions excluding Sub-Saharan Africa will peak in 2071, with an increase of 25 percent from today. Last, populations in Sub-Saharan Africa will still be growing in 2100, with an increase of 174 percent from today.

Populations across later wave regions are still increasing. The second wave’s total population will reach its maximum by 2071, going from four billion today to five billion at its peak. Sub-Saharan Africa’s population will still be growing by the turn of the century and is projected to reach 3.5 billion by then, up from 1.3 billion today. (See sidebar “Predicting the future is hard, and demographers don’t agree.”)

Predicting the future is hard, and demographers don’t agree The complex interplay between fertility, life expectancy, migration, and existing population structures throughout the world not surprisingly creates uncertainty about how populations will evolve in the future. Many organizations forecast trajectories, which often vary widely. The projections in this report are based on the UN medium scenario from 2024. The United Nations is keenly aware of the inherent uncertainty in its calculations: its low and high scenarios for global population in 2100 differ by a factor of two, ranging from seven billion humans to 14 billion humans (Exhibit 1). Exhibit 1 A line chart shows the projected global population, in millions, from 1997 to 2100, based on data from various sources and scenarios. A gray line represents historical data. The United Nations medium scenario reflects the rough global consensus view of population trends, but projections vary across sources and scenarios. The UN high scenario projects a population of 14,395 million by 2100. The UN medium scenario shows 9,664 million by around 2050, and 10,180 million by 2100. The IIASA medium scenario, or SSP2, projects a population of 9,885 million by the end of the century. The IHME reference scenario projects 9,786 million by 2100. Finally, the UN low scenario projects a peak population of 8,942 million by 2050, and a decline to 6,987 million by 2100. Other well-established research centers such as the Institute for Health Metrics and Evaluation and the International Institute for Applied Systems Analysis use alternative methodologies to estimate population projections, with marginally different results. While the UN medium scenario is the closest thing to a global consensus view, it is not without its critics. For instance, some contend that it is too optimistic in its forecast that fertility rates will stop falling and slightly rebound in many countries (Exhibit 2). Exhibit 2 A set of line charts tracks fertility rates in the world and in five different countries (the United States, China, Japan, South Korea, and Spain). The y-axis is the total fertility rate, and the x-axis is the year, starting at 2000 and going to 2025. In each chart, a dark blue line shows the real total fertility rate. Six dashed lines show the UN medium scenario predictions from different years (2006, 2008, 2010, 2012, 2015, and 2017). The UN medium scenario predicted that the total fertility rate for these countries would plateau or even rebound in every release, but so far it has kept declining. Another important variable that UN projections cannot account for is changes to migration patterns. While fertility and longevity move slowly, migration can change suddenly due to changing economic conditions, conflict, or climate, among other factors, causing large swings in the evolution and location of populations that are extremely hard to predict. All in all, we are confident that the direction of our insights is correct, useful, and relevant to policy makers, businesses, and individuals. At the same time, it is important to note that specific numbers quoted in this research may not reflect exactly how the future will unfold, and so the report should be read as a scenario to prepare for rather than a prediction.

The population balance will shift decisively to later wave countries

These dynamics mean that the planet’s population is shifting toward later wave regions. By 2050, a quarter of the global population will live in first wave regions, compared with 35 percent of the world’s people today. According to UN projections, these regions could be home to less than 20 percent of the global population by 2100 (Exhibit 7).

Even though Sub-Saharan Africa’s fertility rate is falling fast, almost 300 of the world’s next thousand babies will be born there. Nigeria alone will become home to 57 of the next thousand—or five more than the 52 born across Central, Eastern, and Western Europe combined. Similarly, 172 of the next thousand babies the stork delivers will be in India, where the birth rate overall has dropped below replacement but where the current population of women of childbearing age is still high.

By 2100, Sub-Saharan Africa will account for all of the net global population increase, doubling its current share to 34 percent. By contrast, Greater China’s share of the global population, today the second largest among the ten regions, will shrink by two-thirds, from 18 percent in 2023 to 6 percent by 2100. This would make Greater China’s population only 170 million larger than North America’s, according to UN estimates, compared with a difference of roughly one billion people today.

Exhibit 7 A chart with four stacked bars shows the share of total global population across different regions of the world in 1997, 2023, 2050, and 2100. In 1997, 42 percent of the global population lived in first-wave regions including Greater China, Advanced Asia, North America, Western Europe, and Central and Eastern Europe. This share decreased to 35 percent in 2023 and is projected to continue declining, to 26 percent in 2050 and 18 percent in 2100. Sub-Saharan Africa will drive nearly all the growth in the share of the total population. In 1997, 11 percent of the global population lived in the region. This share increased to 16 percent in 2023 and is projected to climb to 23 percent in 2050 and 34 percent in 2100.

Labor markets are expected to shift accordingly to young and growing countries in later wave regions unless migration patterns change dramatically, a trend we explore in greater detail in subsequent chapters. By 2050, holding current hours worked per capita constant within each age group, later wave regions would account for more than two-thirds of all hours worked globally.

At that time, Sub-Saharan Africa alone could account for 18 percent of global hours worked, doubling its share of work hours today. The share of the world’s work done by Chinese workers, on the other hand, could drop to 18 percent by 2050 from 26 percent today, and every other first wave region’s share is set to shrink. This could create an opportunity for many later wave countries to progress economically. Opportunities span the entire tradeable economy—services as well as manufacturing.

At least for the next quarter century, countries in later wave regions will account for more than half of global consumption, too, due to fast-growing young populations and growing incomes. For example, World Data Lab projects that India and Emerging Asia will account for 30 percent of global consumption at purchasing-power parity (PPP), up from 12 percent in 1997. By comparison, Advanced Asia, North America, and Western Europe could account for just 30 percent of the world’s consumption then, down from 60 percent in 1997 (Exhibit 8).

Exhibit 8 A series of charts shows global consumption composition, measured in trillions of 2021 US dollars adjusted for purchasing power parity, for 1997, 2023, and 2050. It breaks down consumption into three categories: first-wave (more developed) regions, a later wave, and Sub-Saharan Africa. Consumption pools are shifting from North America and Western Europe (which are projected to fall from 60 percent in 1997 to 30 percent by 2050) to Emerging Asia and India (projected to increase to 30 percent by 2050, up from just 12 percent in 1997).

This shift has important implications for many businesses in first wave and later wave regions alike as they develop and scale products to serve growing markets. As income and consumption grow in later wave regions, local and multinational companies will need to determine how to best meet changing local tastes and adapt their products and services accordingly. Affordability may increase in importance as consumers in later wave regions present a bigger market opportunity for businesses. Navigating as a business may become more complex, as many later wave countries have more challenging legal and governance environments and are more conflict prone.

Prospects of depopulation put the focus on fertility rates

Over the longer term, countries in first wave regions may face the challenge of depopulation (Exhibit 9). Populations in 26 countries in these regions are on track to decline by a third or more by 2100, while in countries including China, Poland, and South Korea, they are expected shrink by half or more. Projections suggest that some countries with fertility rates below replacement, including France, the United Kingdom, and the United States, will have continued population growth through 2100 based on positive net migration.

Exhibit 9 A bar chart shows the projected population decline from 2023 to 2100 in different first-wave regions and countries and in five later-wave countries. Based on current projections of fertility and longevity, many countries are headed toward a population decline by 2100. Populations in 26 countries in these regions are on track to decline by one-third or more by 2100. China’s population is expected to shrink by half or more. Some countries with fertility rates below replacement, including France, the United Kingdom, and the United States, will have continued population growth through 2100 due to positive net migration. In later-wave countries, Nigeria is expected to double its population by 2100.

Smaller populations could affect many sectors of the economy as the number of children born dwindles. If a country had a constant fertility rate of 0.7, equivalent to South Korea’s rate today, it would have just 13 grandchildren per 100 grandparents two generations from now. Just imagine school systems needing to adjust to a precipitous drop in the number of students, resulting in closing schools and extended travel distances. Declining populations would also challenge debt sustainability and the social contract, not to mention the global geopolitical balance. While some contend that smaller populations could reduce carbon emissions, MGI research has found that sustained economic growth is essential to pay for the net-zero transition—and this may come into question if populations shrink.

How different would first wave regions look in 2050 and 2100 if fertility rebounded? We developed what we call the “replacement floor hypothetical,” which assumes that countries with fertility rates below the replacement rate today achieve a replacement-level fertility rate of 2.1 births per woman starting in 2024 and for every subsequent year. While this outcome is highly unlikely, it is an informative way to think about an alternative future.

Changing fertility rates don’t have an immediate effect, although due to compounding, having more children today under any scenario would have a big impact over the longer term. Under the UN medium scenario, the global population would reach 9.6 billion by 2050, while it would climb to 10.2 billion under our replacement floor hypothetical over the same period. By 2100, populations under the two scenarios would grow to 10.2 billion and 12.6 billion, respectively. In Advanced Asia, achieving our hypothetical would lead to a population of 247 million in 2100, more than 1.6 times the population expected under the UN medium scenario (Exhibit 10).

Support ratios would also remain significantly higher, although still lower compared with today. By 2100, support ratios in first wave regions would level out at about 2.2 people of working age per senior, compared with a ratio of 1.4 under the UN medium scenario. In Western Europe, for example, the support ratio would increase from a projected 1.7 under the UN scenario to 2.2 under our hypothetical.

Exhibit 10 Two bar charts show projected total population, in millions, and support ratios for 2050 and 2100 in two scenarios. The UN medium scenario reflects current demographic trends. The replacement floor hypothetical assumes that all countries with below-replacement fertility rates in 2024 immediately achieve a replacement rate. Raising fertility rates today to match the replacement rate could increase populations and support ratios across all first-wave regions by 2050 and 2100.

Increasing fertility rates, which traditionally fall as national income and female labor force participation rates rise, can be challenging. There are no clear examples of countries successfully boosting their birth rates significantly, although many are trying. For instance, the South Korean government has underwritten postpartum care centers in an effort to make childbirth as trouble-free as possible. Hungary offers one-time cash incentives to new parents and spends almost 6 percent of its GDP on fertility and family programs overall. Several Western European countries have extended family leave policies; Norway, for instance, covers the incomes of new parents up to a maximum of 49 weeks set by its welfare system, and many Norwegian employers choose to cover any gap in income to maintain full salaries. Despite these efforts, none of these countries has managed to push fertility rates back to the replacement level, although each initiative offers insights about what does and does not work to influence fertility rates over the longer term. Research tracking these efforts suggests that, on their own, policies that have been implemented and evaluated in high-income countries to date are unlikely to lead to substantial or sustained increases to the birth rate.

Regardless, any children born over the next few decades will not enter the workforce right away. Thus, even as countries consider steps to address population decline in the long term, they need to adapt to demographic shifts over the next two decades—the die has already been cast.

Chapter 2: A lower-growth, higher-dependency future in first wave regions

Many first wave economies face a virtually unprecedented depopulation challenge toward the end of the century, according to UN projections. More immediately, they face another challenge: increasing dependency that could depress economic growth over the next quarter century. As population pyramids become bottom-light and top-heavy, the well-being of a growing legion of older people and of society at large will depend on a stagnant or shrinking number of people who work, which will increase pressure on public finances. Youth scarcity could also modify consumption and savings patterns.

In this chapter, we begin by analyzing the consequences of the demographic shift on labor markets and on GDP per capita growth by 2050 in first wave regions (chapter 2.1). Our findings are not projections: we have taken an all-else-being-equal approach, keeping all variables constant except the demographic structures, or age mix, of economies.

A combination of three levers—higher labor intensity, more robust productivity growth, and shifts toward a younger age mix via higher fertility and effective migration—can offset the headwinds of the youth deficit (chapter 2.2). In many countries in first wave regions, however, no one of those levers alone can sustain past GDP per capita growth rates.

We then examine what could happen to savings trends and public finances (chapter 2.3). Finally, we examine changes in labor and consumption patterns that businesses may face and consider how they can respond (chapter 2.4).

2.1. Demographic shifts, slower economic growth

People typically work less as they get older, so the shifting demographic trends we’ve mapped could slow economic growth. GDP per capita depends on the number of hours worked per person and how productive each hour of work is, or productivity. Hours worked, in turn, depend on how much individuals of each age work, or labor intensity, and the number of people in each age group, or the age mix. Thus, GDP per capita growth depends on productivity growth, shifts in the age mix, and growth in labor intensity among people in each age cohort.

Under current projections, a changing age mix—more older people and fewer working-age people—will result in slower growth in hours worked and thus reduce GDP per capita growth if left unaddressed. In this section, we analyze the consequences of this shifting age mix on the growth in hours worked per person. Throughout, we assume that labor intensity in each age group remains constant at 2023 levels (see sidebar “Our approach to sizing the impact of demographic changes and how to counteract them”).

Our approach to sizing the impact of demographic changes and how to counteract them GDP per capita growth depends on growth in productivity—the value of output produced per hour of work—and growth in hours worked per person. The latter, in turn, depends on labor intensity growth in each age group and changes in the age mix. Labor intensity is driven by the share of the population that seeks work (the labor force participation rate), the share of those who find employment, and the number of hours each worker works. The age mix depends on fertility rates, longevity, and migration flows. Productivity growth is driven by physical and human capital investments as well as the rate of innovation. Take Western Europe as an example (exhibit). As more women and older people joined the labor force there, labor intensity grew by 0.4 percent on average annually from 1997 to 2023. However, as the region’s age pyramid skewed older, primarily due to falling fertility rates, the changing age mix reduced economic growth by 0.3 percent per year. Productivity grew by 0.8 percent per year. Combined, the three components brought overall GDP per capita growth to 1 percent a year. An exhibit depicts the factors driving GDP per capita growth from 1997 to 2023 in Western Europe. Productivity was the most significant contributor to GDP per capita at 0.8 percent, followed by labor intensity at 0.4 percent. The changing age mix, with older population due to falling fertility rates, had a negative contribution of minus–0.3 percent. As the number of older people whose labor intensity is low increases and middle-aged cohorts with high labor intensity shrink, the age mix will increasingly depress growth, absent changes. Thus, labor intensity or productivity will have to grow faster to maintain past GDP per capita growth, or the age mix will need to shift in ways that differ from current UN projections via changes in fertility rates or migration. We aim to answer two questions in the first two sections of chapter 2: How much will the change in the age mix projected under the UN medium scenario decrease growth in hours worked per capita and thus GDP per capita growth (chapter 2.1)? What changes in productivity, labor intensity, or the age mix would be necessary to maintain past GDP per capita growth (chapter 2.2)? In chapter 2.1, we size the impact of the age mix on the growth of hours per capita. We hold the other component that drives hours, labor intensity per age group, constant at 2023 levels. In chapter 2.2, we consider target GDP per capita growth, which is the average annual growth in a country or region over the past 25 years, and size the changes needed in productivity growth and labor intensity to maintain that growth, given the drag of the baseline age mix calculated in chapter 2.1. In only two countries does the target we use differ from their average 1997–2023 GDP per capita growth: China and South Korea. In 1997, these countries were emerging economies, so targeting their high past growth would be unrealistic. Instead, we calculated new targets for them based on the growth trajectory of economies that developed earlier. The GDP per capita growth target for China is 4.9 percent per year, while that of South Korea is 2.0 percent. Many combinations of labor intensity and productivity growth could result in the same GDP per capita growth, so we show two of these combinations: the required increase in labor intensity if past productivity growth remains constant, and the required annual productivity growth if past hours per capita growth remains constant. Returning to the example of Western Europe, average GDP per capita growth in the past quarter century was 1 percent per year, which we use as the target for future growth. The region’s age mix will drag growth down by 0.4 percent a year. Holding past productivity growth constant at 0.8 percent, labor intensity would need to grow by 0.6 percent annually to meet the GDP per capita growth target. By contrast, holding hours per capita growth constant at 0.2 percent, future productivity needs to grow by 1.2 percent annually to meet the target. Additional migration changes the age mix and thus affects average weekly hours worked per capita, so we separately calculate how many additional migrants would be needed to reach the required increase in hours, assuming past productivity growth stays constant.

To maintain GDP per capita growth, countries will need to influence their age mix, increase labor intensity, or boost productivity growth—or, more likely, rely on a combination of all three. In the following section, we analyze how much these three levers would need to be pulled in order to maintain GDP per capita growth at the same rate recorded over the past 25 years.

Labor intensity declines at older ages—before official retirement

Labor intensity, measured as weekly hours worked per person in an age group, starts declining everywhere before official retirement ages. Across first wave regions, weekly hours worked per capita peak at about 50 years of age and decline thereafter (Exhibit 11). The primary reason is falling labor force participation rates—fewer older people continue to work—but on average, older workers who are employed also work fewer hours.

In Germany, for instance, people aged 25 to 54 years work 25 hours per capita a week, on average, while those aged 55 to 64 years work 21 hours a week. Among Germans who are 65 years and older, this plummets to an average of two hours per capita per week—that is, two hours per person, including those who aren’t in the labor force. The rapid decline of hours per capita reflects two trends: lower participation in the labor force and less intensity among those who do work—but the net effect is what matters for an economy.

Learning from Japan Countries within waves are not all aging at the same pace. Japan’s fertility rate fell earlier than the rates of its first wave peers, and its average life expectancy at birth is the highest in the world at 84 years. In 2005, 20 percent of its population was 65 years and older, and today that age cohort makes up 30 percent of the Japanese population. Projections suggest that the United States will be as old as Japan is today after 2100. France could reach this milestone in 2079, China in 2047, and Spain in 2037. This makes Japan an interesting case study and raises the question: What can other first wave countries learn from Japan? The first lesson is that as support ratios decline, labor intensity must rise—fewer working-age people means that, all else being equal, others may need to work more to sustain economic growth. Japan’s labor intensity is higher than that of virtually all other developed countries, and even more so at older ages (exhibit). The labor force participation rate among Japanese aged 50 to 65 years is 84 percent, up from 73 percent in 1997. Among people 65 years and older, it is 26 percent, compared with 19 percent in the United States and 4 percent in France. A line chart shows the average weekly hours worked per capita over a life cycle for Japan, China, France, South Korea, the United States, and a group of other first-wave economies, including Australia, Germany, Italy, Spain, and the United Kingdom. The chart illustrates that, on average, individuals in Japan work more hours than their counterparts in most other first-wave economies, and even more at older ages. The second lesson Japan offers is that higher labor intensity alone may not be enough. Japan’s annual labor productivity has grown 1.1 percent per year, on average, since 1997, faster than the 0.8 percent increase in Western Europe and somewhat less than the 1.5 percent growth in the United States. Yet Japan’s GDP per capita has grown just 0.6 percent, compared with 1 percent in Western Europe and 1.4 percent in the United States. The demographic drag is inexorable and severe, and when it hits, boosting productivity growth becomes even more relevant.

Japan, a society with more older people, has more older workers, but labor intensity there still declines with age: Japanese between 25 and 64 years work 30 hours on average, and those 65 years and older work seven hours (see sidebar “Learning from Japan”).

Exhibit 11 Six line charts show average weekly hours worked per capita by people in different age groups for Advanced Asia, North America, Central and Eastern Europe, Greater China, and Western Europe, as well as the average for the five regions. The data is from 2023. A dotted vertical line marks the 50-year-old mark. All regions follow a similar trend, with labor intensity starting to decline when workers are in their 50s, well before retirement age.

Fewer hours worked will depress economic growth

Because labor intensity declines with age, a future with fewer young and middle-aged people and more older people will mean lower growth in hours per capita per week, or labor intensity, all else being equal. From 1997 to 2023, the cohort aged 65 years and older was the fastest-growing age group in every first wave region. But the number of working-age people also increased in many first wave countries. The number of children younger than 15 years fell, a reflection of declining fertility rates. This combination helped partially balance the age mix for a while, diminishing the impact of increasingly aged populations. However, over the coming 25 years, the number of older people living in first wave regions will continue to grow while every other age cohort shrinks. This shift in the age mix could slow the growth in hours worked per capita across first wave regions by 2.2 hours per capita per week on average, thus slowing GDP per capita growth (Exhibit 12).

Exhibit 12 A chart shows the contribution to a projected total change of minus-2.2 hours per capita of work per week from 2023 to 2050, broken down by age group in first-wave economies. Because labor intensity declines with age, a future with fewer young and middle-aged people and more older people will mean an overall decline in hours per capita per week, thus slowing GDP per capita growth.

From 1997 to 2023, the age mix effect was neutral or slightly negative across first wave regions, dragging down hours of work per capita by a negligible amount. Over the next quarter century, the age mix will slow the growth in hours per capita per week—and thus GDP per capita growth—by 0.4 percent annually in every first wave region other than North America (Exhibit 13). This is equivalent to a cumulative reduction in hours per capita per week of 2.2 hours across first wave economies from 2023 to 2050, ranging from 0.8 to 2.6 in different regions. A 0.4 percent drag on GDP per capita growth per year may seem trifling, but it isn’t. The shift in age mix could slow GDP per capita growth over the next quarter century, for example, by an average of $10,000 in Western Europe and $6,000 in Greater China.

Exhibit 13 A series of area charts shows the contribution of age mix shift to hours per capita growth, comparing the periods 1997 to 2023 and 2023 to 2050. Each bar represents a region or country and illustrates the change in growth attributable to the shifting age mix. For instance, in Western Europe, the contribution of the age mix shift to hours per capita growth was minus-0.3 percent from 1997 to 2023 and is projected to be minus-0.4 percent from 2023 to 2050. Demographic shifts will slow GDP per capita growth across all first-wave regions and nearly all first-wave countries.

Naturally, regional averages hide country variation. For instance, the effect of the demographic shift is already apparent in Australia, where a changing age mix has decreased weekly hours and GDP per capita growth by an average 0.2 percent per year over the past quarter century, a decrease forecast to continue at the same pace to 2050. Spain offers a particularly extreme example of the age mix effect. While it was neutral from 1997 to 2023, age mix could deduct 2.8 hours per capita per week, or 0.8 percent of annual GDP per capita growth to 2050.

More women and older people working—and productivity—have supported past growth

Before turning to changes needed in future labor intensity and productivity growth if GDP per capita is to be maintained, it is worth asking how they have evolved in the past.

Exhibit 14 A series of three panels with six line charts each shows the average weekly hours worked per capita across different age groups in 1997 and 2023, broken down by first-wave regions. The first panel shows that aggregate labor intensity increased in Western Europe from 1997 to 2023 and declined in Greater China and Advanced Asia. It remained flat on average in North America and Central and Eastern Europe. The second panel in the series shows that people aged 50 years and older increased their participation in labor markets everywhere. This effect was most pronounced in Europe but was apparent in every region, even in Advanced Asia, where labor intensity overall declined.

Despite increased labor intensity among those older than 50 years and women in most first wave regions over the past quarter century, most regions had stagnant or falling aggregate labor intensity, largely because fewer people younger than 29 years worked. Western Europe was the only first wave region where overall labor intensity not only increased but more than completely offset the negative impact of the changing age mix.

Spain once again offers an interesting and extreme example of the impact of labor intensity on economic growth. Overall, weekly hours per capita there grew by an average 0.5 percent per year from 1997 to 2023, boosting GDP per capita growth by the same amount. The age mix shift did not add to or subtract from growth, meaning all additional hours worked were the result of increased labor intensity. But Spain, like other countries, not only will see a growing drag from the age mix, but may also struggle to sustain the very high growth in labor intensity of the recent past. Over the past quarter century, labor force participation among working-age females in Spain jumped from 60 to 81 percent, an unrepeatable acceleration. Additionally, weekly hours per Spanish worker—those already in the workforce—have trended down for decades, and the country is currently discussing reducing the working week from 40 to 37.5 hours.

Productivity growth is the other lever underpinning GDP per capita growth, and generally the most important one. Across first wave economies, it has been the largest contributor to growth over the past quarter century (Exhibit 15).

Exhibit 15 A chart presents data on the contribution of age mix, labor intensity, and productivity to GDP per capita growth, both historically (1997–2023) and projected (2023–50). It is divided into two sections, one for regions and one for specific countries. For Western Europe, from 1997 to 2023, the age mix is projected to have a minus-0.3-percentage-point impact on GDP per capita, while labor intensity is expected to contribute 0.4 percentage point. Productivity is projected to make the largest contribution at 0.8 percentage point, resulting in a total GDP per capita growth of 1.0 percentage point. Productivity growth was the main driver of growth in GDP per capita in the past quarter-century in first-wave countries and regions.

With demographics dragging down future GDP per capita growth, labor intensity, productivity, or the age mix will need to shift. By how much is the question we turn to next.

2.2. More workers, more hours, and more productivity needed

A growing youth deficit has already set first wave regions on a trajectory for declining hours of work per person and thus slower GDP per capita growth through 2050 compared with the past quarter century. Maintaining past economic progress, let alone increasing it, will require measures to address the impact of demographic headwinds. In this section, we explore the three levers available—labor intensity, productivity, and age mix—to neutralize the drag on economic growth caused by shifting age mix. The third lever, influencing the age mix by increasing the number of working-age people, can be pulled via migration and higher fertility. However, the impact of higher fertility rates by 2050 would be negligible, as a baby born today would be barely joining the workforce. So we only analyze the impact of migration here.

The conclusion is clear: pulling on only one of these three levers will be insufficient to achieve this goal in most countries, so using some combination of all three will be needed to maintain growth and raise living standards (Exhibit 16).

To size the degree to which each lever must be pulled to sustain GDP per capita growth, we continue to rely on the all-else-being-equal approach we used for the analysis in the preceding section. We consider a target GDP per capita growth rate for each country equal to its annual growth over the past 25 years in all countries other than China and South Korea. In those countries, we lowered the target, since replicating their past growth would be an unrealistically high goal given their much more advanced level of development today (see sidebar “Our approach to sizing the impact of demographic changes and how to counteract them”).

While the levers will likely need to be deployed in combination, each country can opt for a different “menu” of combinations, depending on its characteristics, opportunities, and challenges.

Exhibit 16 A chart shows the changes in labor intensity, productivity, and age mix needed to sustain GDP per capita growth in eight countries from 2023 to 2050. The countries are Australia, China, France, Germany, Italy, Japan, South Korea, Spain, the United Kingdom, and the United States. The data shows that changing the age mix, labor intensity, or productivity growth alone cannot sustain growth. A combination of all three is needed.

Both labor intensity and productivity must rise

The first lever, increasing labor intensity, will be key. We analyze the overall increase in labor intensity needed to maintain past GDP per capita growth as well as what it would take if the full lift were accomplished by just one of three population groups alone: males under 50 years of age, or “younger men”; females less than 50 years old, or “younger women”; and people older than 50 years, or “older people.”

Consider Germany, where GDP per capita grew an average of 1.1 percent per year over the past quarter century. Productivity growth over that period was 0.9 percent annually. Changes in the German age mix going forward are expected to reduce that growth by 0.4 percentage point. This means the country will need to fill a gap in GDP per capita of 0.6 percentage point per year if past productivity growth is to persist, which translates into an overall increase in labor intensity of 2.2 more hours of work per capita per week, or 5.1 hours per worker. For any of the three cohorts—younger men, younger women, or older people—to achieve that on their own, weekly hours per capita would need to expand by 12.7 hours, 13.2 hours, and 6.1 hours, respectively by 2050 (Exhibit 17).

Hours per capita can in turn be increased in two ways: more people working—higher labor force participation—or more hours worked per worker in the labor force. While the latter is a possibility, recent trends in hours worked have gone in the opposite direction: German workers today work 2.5 hours less per week on average than 25 years ago, and the country is testing a four-day work week, which would further reduce labor intensity. Raising weekly hours worked by some groups, for example older people, may be feasible. Yet relying on only one cohort is challenging: if considering only existing workers, workers aged 50 to 79 would need to increase their weekly hours by 17.9 hours each, from an average of 27.0 hours today to 44.9 hours, to sustain past GDP per capita growth absent other changes.

Germany could also increase labor force participation, but the country already has one of the highest labor force participation rates in the world, at 90 percent among younger men and 81 percent of younger women. In fact, if the country were to rely solely on increasing labor force participation among these two cohorts to maintain past GDP per capita growth, younger workers’ labor force participation would need to exceed 100 percent, which is impossible. Germany could raise the participation of older people, which today is at 45 percent. However, the increase needed would be large, 18 percentage points.

Exhibit 17 A chart shows the additional hours of work per week needed in Germany by 2050 to sustain GDP per capita growth. It compares three scenarios: if the additional hours were worked only by males aged 20 to 49, only by females aged 20 to 49, and only by older people aged 50 to 79. In the first two cases, labor participation would need to be boosted by more than 100 percent, which is impossible. Older people would also need a large increase in participation rate, from 45 to 63 percent.

The German example illustrates how increasing labor intensity growth, while necessary, is unlikely to do the job of maintaining GDP per capita growth on its own. Some countries, such as Australia, the United Kingdom, and the United States, have a somewhat easier task, given their more favorable demographic prospects (Exhibit 18). Others, like China, Italy, South Korea, and Spain, have an even harder task than Germany. And keep in mind that this analysis depends on two important underlying assumptions. First, it assumes productivity growth continues to increase at the same rate, on average, as it did over the past 25 years. In a scenario with lower productivity growth, the growth in labor intensity needed would be even bigger, whereas if productivity growth increases, it would be smaller.

Second, the target for each country is equal to its past GDP per capita growth, which in many cases is not high. Italy’s target, for example, is a mere 0.4 percent annual growth. Should Italy want to achieve a healthier GDP per capita growth of, say, 1.5 percent, similar to that of the United States or Australia, the growth in hours per capita required would jump from 2.7 to a whopping 7.9, assuming constant past productivity growth of 0.3 percent per year.

Exhibit 18 A table shows the additional hours per capita per week that would be needed to sustain past GDP per capita growth by 2050 in various first-wave countries if the entire increase in hours worked came from specific segments of the population (males aged 20 to 49, females aged 20 to 49, and older people aged 50 to 70). For all people, an average of 2.2 additional hours per week would be required across the total first wave of countries, ranging from a low of 0.7 in the United Kingdom and the United States to a high of 4.7 in Spain.

Given the big, and in some cases unfeasible, requirements for increased labor intensity, countries also need to find ways to propel productivity growth, the second key lever. Assuming hours worked per capita grow at the same rate as in the past quarter century, productivity in most first wave countries would need to grow between 1 and 2 percent a year to maintain past GDP per capita growth (Exhibit 19). That level of increase may seem modest, but in Germany, for example, it means doubling the past decade’s average rate of annual productivity growth of 0.7 percent. In Spain, productivity growth needs to increase by about four times, even assuming labor intensity grows at past rates. If labor intensity does not increase—a plausible scenario—productivity in Germany and Spain would need to grow by 1.5 percent and 1.9 percent, respectively, per year.

Exhibit 19 A series of area charts shows the productivity growth for eight first-wave countries from 1997–2012 to 2012–23, compared with the annual future productivity growth needed to sustain GDP per capita growth from 1997 to 2023. In all cases except China, productivity growth would have to accelerate substantially to match GDP per capita growth rates from 1997 to 2023.

While productivity can grow by raising capital investment and harnessing digital and automation technologies, most first wave countries have long struggled to do so. In fact, productivity growth has slowed in many of those countries over the past decade. For instance, US productivity over the past decade grew 0.8 percent per year on average, much less than its earlier annual growth of 2.0 percent.

From the beginning of 2023 through the second quarter of 2024, productivity growth spiked in the United States to top 2 percent per year, while it flatlined in many Western European countries and Australia. This suggests that the United States may be better positioned to jump-start growth, although that remains an open question. The future holds opportunities and risks for productivity growth everywhere. For example, while AI promises to propel productivity, increasingly fragmented global value chains and the growth of traditionally low-productivity service sectors like healthcare due to increasing longevity could restrain productivity growth.

China faces a special challenge. It is a first wave country because of its current demographic profile, but its GDP per capita of $21,000 (after adjusting for purchasing power) is closer to that of later wave regions. The country’s population is aging faster than almost anywhere else on Earth due to its low and declining fertility rate. To achieve a 4.9 percent growth target, China would need to grow its productivity by 5.5 percent a year, on average, through 2050 to counteract the demographic shift. This target is challenging, though not unattainable. While Chinese annual productivity growth over the past quarter century has been impressive, above 8 percent, it has slowed down more recently. Since the pandemic and through 2023, Chinese productivity grew by 5.2 percent annually. As the country develops further, maintaining such very high rates of productivity growth will not be an easy feat.

‘Isoquants’ help plot the many potential paths to sustaining growth An “isoquant” is an economic concept that describes different combinations of inputs—in this case, productivity growth and increased labor intensity—that result in a given level of output; here, GDP per capita growth. Take Spain as an example (exhibit). Given the impact of the demographic shift there through 2050, if labor intensity and productivity growth stayed the same, GDP per capita would grow 0.2 percent per year on average, significantly less than the country’s average annual past GDP per capita growth of 1.1 percent. If Spain maintained its past growth in hours worked, or 1.5 extra hours of work per person per week, productivity would need to grow by 1.4 percent a year. By contrast, if productivity growth remained stable at 0.6 percent a year, Spaniards would need to add 4.7 hours per week per capita to their current labor intensity levels. In fact, if Spain were unable to replicate the same labor intensity growth as in the past, which is not unlikely, the productivity growth needed to offset the demographic drag would exceed 1.4 percent and reach 1.9 percent. An isoquant chart shows the different combinations of productivity growth and increased labor intensity that would be needed in Spain to sustain its past GDP per capita growth of 1.1 percent per year through 2050. Due to age mix drag, GDP per capita would grow just 0.2 percent per year if Spain had the same increase in productivity and hours per capita as in the past. If hours per capita growth was the same as in the past—1.5 extra hours worked per capita—Spain would need annual productivity growth of 1.4 percent. And if productivity growth were the same as in the past—0.6 percent per year—Spain would need to add 4.7 more hours per capita per week.

All in all, relying on either of these levers, labor intensity and productivity growth, to offset the impact of the demographic shift on its own is unlikely to do the job. Fortunately, countries can use them in combination (Exhibit 20). The possible combinations of hours and productivity growth needed to maintain GDP per capita growth vary by country. For example, Germany could achieve past growth by increasing productivity at 0.9 percent per year while also increasing hours of work per capita by 2.2 or, alternatively, by growing productivity at 1.4 percent and hours of work per capita by 0.5 hour. It could also attain past growth with a middle point of productivity and hours between these two outcomes, for example productivity growth of 1.1 percent and an additional 1.6 weekly hours per capita (see sidebar “‘Isoquants’ help plot the many potential paths to sustaining growth”). What is clear is that most countries in the first wave will likely need to rely on both.

Exhibit 20 An isoquant chart shows the different combinations of productivity growth and increased labor intensity that would be needed in ten first-wave countries to sustain their past GDP per capita growth through 2050, offsetting the impact of the demographic shift. Most countries in the first wave will likely need to rely on both levers.

The age mix can be changed, but with insufficient impact by 2050

The third lever to counteract the coming demographic drag is to influence the age mix itself, shifting the path already projected by the United Nations. This would require changes in fertility rates or migration patterns.

While increasing fertility rates is critical for population growth over the long term, babies born today will barely have entered the labor market by 2050, reducing the potential impact of higher fertility rates over much of the next quarter century. Migration can more immediately help countries grow their working-age population. However, the increase in migration needed to maintain GDP per capita growth is significant.

For example, the United Kingdom’s historical net migration is about 270,000 individuals per year, or 0.4 percent of its 2023 population annually, on average. Holding past productivity growth constant, sustaining the country’s past GDP per capita growth rate would require an average additional 140,000 migrant workers annually assuming that all migrants work, which would mean increasing the country’s population by 0.6 percent per year through 2050. But not all migrants work, at least right away, which increases the number of people of working age but does not necessarily boost GDP. Assuming that the share of new migrants to the United Kingdom participating in the workforce is the same as in the past, or 80 percent, then the annual flow of migrants needed to maintain GDP per capita growth in the United Kingdom at past levels would need to be an additional 185,000 above historical levels, or a total of 0.7 percent of the current population annually. Migrants also come with relatives who may not work—for example, children—so the real number needed would be even larger.

Other metrics illustrate the scale of migration required to maintain the economic status quo. For instance, new research estimates that if advanced economies relied on migration alone to maintain support ratios at today’s levels, in many cases as much as half of their populations would be foreign born by 2050, assuming each migrant brings one dependent.

2.3. A growing societal bill for dependency

Older people consume more than younger people, directly through purchases and indirectly via in-kind transfers such as government-financed healthcare services, even as their income from working decreases and eventually disappears at retirement. This creates an imbalance between total consumption and labor income earned by seniors within a given year; we call this difference the senior gap.

This gap requires funding via public or private means. In first wave regions, the largest source of funding comes from governments taxing workers over their careers and making transfers in the form of pensions and in-kind services like healthcare to seniors. Additionally, some older households finance part of their consumption by spending savings that they accumulated while working.

As numbers of older people grow, all else being equal, aggregate senior gaps will widen. To date, increasing public transfers, mostly pensions, and rising asset prices have funded growing consumption among seniors. Whether and for how long these sources are sustainable as life expectancy extends remains an open question. Pension systems in first wave economies, especially those with defined-benefit programs, are already stretched. If returns on assets decline or public finances can’t stretch any further, the only way to avoid savings depletion or falling consumption among seniors is some combination of the levers previously described—increased labor intensity and higher productivity growth over the short haul and effective migration and accelerated fertility rates in the longer term.

Older people consume marginally more than younger people

Our analysis of consumption encompasses out-of-pocket spending by households and individuals, which we refer to as direct consumption, and, when data is available, in-kind services paid from the public purse. Such transfers are often an important share of consumption, especially in first wave economies with generous public education and healthcare programs. For example, the average German receives $8,000 in public in-kind transfers a year, in addition to $30,000 they spend on direct consumption.

In most first wave regions, older individuals consume marginally more even as they earn less. In places where this isn’t true, consumption doesn’t fall substantially as people age. Both direct and in-kind consumption grow with age. In 2023, those 65 years and older had the highest consumption per capita in most first wave regions (Exhibit 21). Compared with overall average direct consumption by all age groups, this cohort spent 16 percent more per capita annually in both Western Europe and Advanced Asia. When measuring direct and in-kind consumption together, the discrepancy is even larger: seniors “spent” 24 percent more per capita a year in Western Europe and 22 percent more in Advanced Asia.

Exhibit 21 A series of five line charts shows average consumption per person in 2023, indexed to 100, for five first-wave regions: Advanced Asia, North America, Western Europe, Greater China, and Central and Eastern Europe. Two lines are shown for each region: direct consumption and total consumption (direct and in-kind). In 2023, people aged 65 years and older had the highest consumption per capita in most first-wave regions.

The aggregate senior gap will grow

Labor income and consumption change across a life cycle. Children are dependent on their families. When they reach adulthood, they join the workforce and generate income that may exceed their consumption needs, allowing them to save and accumulate wealth. At retirement, labor income decreases but consumption does not, creating a deficit—the senior gap. In the United States, when direct and in-kind consumption were combined, the gap equaled $60,000 on average per person 65 years and older in 2023 (Exhibit 22).

Exhibit 22 A line chart illustrates US labor income and consumption per capita by age group in 2023, measured in 2021 US dollars adjusted for purchasing power parity. Labor income drops precipitously for people aged 65 and older. Consumption, meanwhile, rises steadily throughout the life cycle. For those 65 and older, the wide gap between labor income and consumption is called the “senior gap,” which totals $60,000 on average per person.

As the share of older people rises, all else being equal, aggregate gaps will widen considerably by 2050. To compare the burden over time, we divide the aggregate gap by the total labor income of each region. Take North America, where it was 26 percent in 2023 (Exhibit 23). This means that the total consumption of seniors not funded by their own labor income was equivalent to 26 percent of all labor income in the country. Seen another way, this is the equivalent of a flat tax that, if imposed on all worker incomes, would be required to cover the total senior gap. As the shift in age mix intensifies, North America’s gap will rise to 34 percent by 2050 and go from 33 percent to 46 percent in Western Europe and from 33 percent to 48 percent in Advanced Asia.

Exhibit 23 Three area charts show the projected increase in the senior gap from 2023 to 2050 for three regions. For each region, it presents the senior gap as a percentage of total labor income for both years and highlights the projected increase as a multiple of the 2023 level. In North America, the senior gap is projected to increase by 1.3 times, from 26 percent in 2023 to 34 percent in 2050. The figure for Western Europe is 1.4 times, from 33 percent to 46 percent. The largest projected increase is 1.5 times in Advanced Asia, from 33 percent to 48 percent. The exhibit also shows the per capita senior gap in US dollars for each region in 2023: $60,000 in North America, $41,000 in Western Europe, and $31,000 in Advanced Asia.

The size of the gap may vary between countries based on consumer preferences. For example, consumers in one economy may choose to save more during their working lives and consume more in retirement, while those in another may choose to save less and consume less in retirement. Regardless of the gap’s absolute size, it will rise across all first wave economies.

Individual seniors fund retirement in many ways: by saving directly during working years, by earning returns on assets, through public pensions, transfers and subsidized in-kind services, and through familial care and private transfers. In recent years in advanced economies, two of these sources—public pensions, mostly in the form of pay-as-you-go programs, and asset price appreciation, particularly in family homes, which has buoyed accumulated savings—have been central to funding seniors’ consumption, but they may be increasingly hard to maintain for future generations of retirees.

Public pensions will put increasing pressure on government finances

Public transfers, primarily in the form of public pensions, cover more than half of the senior gap in many first wave countries. In the United States, Social Security covered about half of the senior gap in 2023, while in Spain and France, public pensions funded close to 80 percent of it (Exhibit 24). Other government programs, including in-kind government transfers, fund between 15 and 30 percent of senior gaps, depending on the country. Private sources such as returns on assets filled in the remainder.

Exhibit 24 A stacked bar chart displays the percentage of the senior gap covered and not covered by government pensions in 2023 for seven different countries. Spain and France have the highest government pension coverage at 78 percent and 76 percent, respectively. Italy follows close behind at 73 percent. Germany’s government pensions cover 59 percent of the senior gap. The United States, Japan, and the United Kingdom have lower coverage rates of 52 percent, 51 percent, and 45 percent, respectively. Australia has the lowest government pension coverage at 42 percent.

As support ratios—the number of working-age individuals for every person 65 years and older—fall fast, first wave countries will grapple with the question of whether public pensions and other age-related public transfers are sustainable. In most advanced economies, public pensions have pay-as-you-go systems that are funded by taxes on current workers. In addition, seniors often receive a range of in-kind benefits, which vary by country and individual but usually include healthcare and sometimes extend to housing, utilities, nutrition, or transportation.

Since 1970, time spent in retirement has increased substantially, from eleven to 18 years, according to research by the OECD. As lives lengthen, getting the pension math to “add up” is increasingly challenging. Countries across the developed world have opened conversations on changes ranging from increasing the statutory retirement age to switching to defined-contribution systems, in which retirement benefits are calculated based on the money paid into the program (see sidebar “Pension tensions: Sense on the dollar?”). Absent changes, increasing numbers of seniors will cause government deficits and debts to continue rising.

Pension tensions: Sense on the dollar? More than 2,000 years ago, the fall of the Roman republic was inextricably linked to the payment, or rather the nonpayment, of military pensions. During the American Revolution, army pensions became such a sensitive issue that only the intervention of George Washington himself prevented a mutiny of Continental Army troops over delays in the payment of their promised pensions. Today, almost all advanced economies have some form of pension system, although the comprehensiveness of these systems varies widely and their future is uncertain. Modern pension systems take the following three main forms, and most developed countries have more than one form, or a multi-pillar pension system: Pay-as-you-go systems: Most common in Western Europe, these systems pay retirees from contributions made by today’s workers.

Most common in Western Europe, these systems pay retirees from contributions made by today’s workers. Defined-contribution systems: Workers contribute to a retirement fund during their employment and receive payouts from it in retirement. Both the United Kingdom and China are shifting funding to defined-contribution systems from publicly funded pension systems.

Workers contribute to a retirement fund during their employment and receive payouts from it in retirement. Both the United Kingdom and China are shifting funding to defined-contribution systems from publicly funded pension systems. Personal savings: Workers save and invest their own money for retirement spending. Sometimes this may be facilitated or encouraged by the government, for example through tax-advantaged retirement savings vehicles. The US system features a blend of the three types. Social Security is a pay-as-you-go system; employer-sponsored 401(k) plans are a flavor of defined-contribution pension; and individual retirement accounts (IRAs) are a commonly used personal retirement savings tool. Seventy-three percent of civilian workers in the United States had access to some form of employee retirement benefits in 2023. Public pension systems around the world are under big strains due to slow economic growth, inadequate contribution rates, and increasing longevity, as seniors spend more time in retirement. For example, in the OECD, men are spending 18 years in retirement and women 23 years, compared with 11 and 15 years, respectively, in the early 1970s. The global gap between retirement savings and the amount of savings needed to replace 70 percent of preretirement income for retirees was projected in a 2019 World Economic Forum report to exceed $400 trillion by 2050, more than five times the size of the global economy. The report projected that 25 percent of that gap could stem from unfunded government pension obligations. In the United States, the fund that supports Social Security benefits could be depleted by 2034, at which point benefits could be reduced by about 25 percent unless action is taken to shore up the system. For many years, the retirement paradigm was that one worked into their mid-60s and then lived off pensions and other savings for just a few years before dying. Traditionally, lower life expectancies meant the average person could only expect to live a few years in retirement. As countries grapple with looming issues, that paradigm may need to shift, and countries are experimenting with different ways. Many first wave countries have adjusted funding strategies or moved from a defined-benefit to a defined-contribution system. For example, the Netherlands passed a systemic reform of private pensions that included that switch. Other countries are raising the retirement age. Current retirement ages are set to increase in three-fifths of OECD countries. In China, a 1950s-era system that allowed men to retire at 60 years and women between 50 and 55 years was recently overhauled, increasing the retirement age for men to 63 years and for women to 58 years. Sweden raised the retirement age and will link it to two-thirds of life expectancy gains. France has tightened early and minimum retirement ages. The age requirements for pension eligibility range from 62 years in Colombia, Luxembourg, and Slovenia to 70 years or more in Denmark, Italy, and the Netherlands. Still others are focusing on mandating and facilitating private savings. Australia’s retirement system relies on mandatory private savings via superannuation, requiring employers to contribute 9 percent of wages. Some independent entities project that workers will retire with two to three times the pension income they would have had under the public pension system in the future. And in the United States, the Internal Revenue Service recently increased the percentage of pretax income workers can contribute to IRAs each year.

To illustrate this, we focus on three first wave economies: Spain, the United Kingdom, and the United States; they publish reliable public statistics on government income and expenses by age and have widely accessible public pay-as-you-go pension systems. Governments in these economies collect most tax revenues from their working-age citizens and spend most of that revenue on the youngest and oldest. For example, in Spain in 2023, seniors contributed 12 percent of total tax revenues but consumed more than 40 percent of government spending, mostly in the form of pension payments and healthcare. On the flip side, Spaniards 36 to 45 years delivered 25 percent of all tax revenue and accounted for just 9 percent of government spending (Exhibit 25). This intergenerational social contract works so long as a balance between younger and older people is maintained. However, when that balance tips and there are too few workers to sustain the obligations that societies have to retirees, that

World fertility rates in ‘unprecedented decline’, UN says

10 June 2025 Share Save Stephanie Hegarty • @stephhegarty Population correspondent Share Save

Getty Images In a survey of 14,000 people, one in five respondents said they haven’t had or expect they won’t have the number of children they want

Namrata Nangia and her husband have been toying with the idea of having another child since their five-year-old daughter was born. But it always comes back to one question: ‘Can we afford it?’ She lives in Mumbai and works in pharmaceuticals, her husband works at a tyre company. But the costs of having one child are already overwhelming – school fees, the school bus, swimming lessons, even going to the GP is expensive. It was different when Namrata was growing up. “We just used to go to school, nothing extracurricular, but now you have to send your kid to swimming, you have to send them to drawing, you have to see what else they can do.”

According to a new report by the United Nations Population Fund (UNFPA), the UN agency for reproductive rights, Namrata’s situation is becoming a global norm. The agency has taken its strongest line yet on fertility decline, warning that hundreds of millions of people are not able to have the number of children they want, citing the prohibitive cost of parenthood and the lack of a suitable partner as some of the reasons. UNFPA surveyed 14,000 people in 14 countries about their fertility intentions. One in five said they haven’t had or expect they won’t have their desired number of children. The countries surveyed – South Korea, Thailand, Italy, Hungary, Germany, Sweden, Brazil, Mexico, US, India, Indonesia, Morocco, South Africa, and Nigeria – account for a third of the global population. They are a mix of low, middle and high-income countries and those with low and high fertility. UNFPA surveyed young adults and those past their reproductive years. “The world has begun an unprecedented decline in fertility rates,” says Dr Natalia Kanem, head of UNFPA. “Most people surveyed want two or more children. Fertility rates are falling in large part because many feel unable to create the families they want. And that is the real crisis,” she says.

“Calling this a crisis, saying it’s real. That’s a shift I think,” says demographer Anna Rotkirch, who has researched fertility intentions in Europe and advises the Finnish government on population policy. “Overall, there’s more undershooting than overshooting of fertility ideals,” she says. She has studied this at length in Europe and is interested to see it reflected at a global level. She was also surprised by how many respondents over 50 (31%) said they had fewer children than they wanted. The survey, which is a pilot for research in 50 countries later this year, is limited in its scope. When it comes to age groups within countries for example, the sample sizes are too small to make conclusions. But some findings are clear. In all countries, 39% of people said financial limitations prevented them from having a child. The highest response was in Korea (58%), the lowest in Sweden (19%). In total, only 12% of people cited infertility – or difficulty conceiving – as a reason for not having the number of children they wanted to. But that figure was higher in countries including Thailand (19%), the US (16%), South Africa (15%), Nigeria (14%) and India (13%). “This is the first time that [the UN] have really gone all-out on low fertility issues,” says Prof Stuart Gietel-Basten, demographer at the Hong Kong University of Science and Technology. Until recently the agency focused heavily on women who have more children than they wanted and the “unmet need” for contraception.

Still, the UNFPA is urging caution in response to low fertility. “Right now, what we’re seeing is a lot of rhetoric of catastrophe, either overpopulation or shrinking population, which leads to this kind of exaggerated response, and sometimes a manipulative response,” says Dr Kanem. “In terms of trying to get women to have more children, or fewer.” She points out that 40 years ago China, Korea, Japan, Thailand and Turkey were all worried their populations were too high. By 2015 they wanted to boost fertility. “We want to try as far as possible to avoid those countries enacting any kind of panicky policies,” says Prof Gietel-Basten. “We are seeing low fertility, population ageing, population stagnation used as an excuse to implement nationalist, anti-migrant policies and gender conservative policies,” he says. UNFPA found an even bigger barrier to children than finances was a lack of time. For Namrata in Mumbai that rings true. She spends at least three hours a day commuting to her office and back. When she gets home she is exhausted but wants to spend time with her daughter. Her family doesn’t get much sleep. “After a working day, obviously you have that guilt, being a mom, that you’re not spending enough time with your kid,” she says. “So, we’re just going to focus on one.”

As women have far fewer babies, the U.S. and the world face unprecedented challenges

toggle caption ‎‎‎‎‎Grace Widyatmadja for NPR

When Sarah and Ben Brewington got married and moved to Los Angeles, they expected their next life step would be having kids. It just seemed like the natural thing to do. Instead, they kept delaying their first child, focusing on their careers, enjoying travel and spending time with friends.

“I started thinking, ‘What do I want?'” Sarah Brewington said. Gradually, they reached a decision: “It’s a resounding no. It’s not something I’m interested in or want,” she said.

“This life we’re building together didn’t need this other element in it,” agreed her husband, Ben Brewington. “I don’t feel guilty at all about it now to say I don’t want kids.”

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The Brewingtons, both age 35, say they understand they are part of a wider trend. Far more people in the U.S. and around the world are choosing to have significantly fewer children or opting out of parenthood altogether.

toggle caption Grace Widyatmadja for NPR

“I think it probably should be a concern for the government, the declining birth rate,” Sarah Brewington told NPR. “There is going to come a time when everyone is retiring and there’s not going to be a workforce.”

Many researchers believe this accelerating global shift is being driven in large part by a positive reality. Young couples, and women in particular, have far more freedom and economic independence. They’re weighing their options and appear to be making very different choices about the role of children in their lives.

“It’s not that people don’t like kids as much as they used to,” said Melissa Kearney, an economist who studies fertility and population trends at the University of Notre Dame. “There’s just a lot of other available options. They can invest in their careers, take more leisure time — it’s much more socially acceptable.”

This change in decision-making and behavior appears to be accelerating. New research from the United Nations found that the number of children born to the average woman worldwide has reached the lowest point ever recorded. In every country and every culture, women are having fewer than half as many children as they did in the 1960s.

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“Especially in high-income countries, the birth rate has very quickly plummeted in a sustained way,” Kearney said. “We’re actually really facing the question of depopulation.”

Many women are choosing fewer children — or no children at all

In the U.S., this shift is driven in part by a growing number of women deciding against motherhood. According to Kearney, half of American women now reach age 30 without having at least one child. That’s a dramatic increase from two decades ago, when only about a third of American women didn’t have a child by that age. Many families are also choosing to have significantly fewer children.

“I remember at one point I was like, ‘I definitely want three kids.’ I was like, ‘That’s gonna be great.’ That’s what my mom had. That’s what I want to have,” Lusely Martinez, age 35, told NPR.

Martinez said she loves being a mother. “We get to watch our little heart walk around and learn and discover things. It’s just so incredible.” But after a lot of discussion, she and her husband decided that sticking to one child is best for their family.

“Having a child is extremely expensive,” she said. “We’re stopping and we’re thinking, ‘Is this actually smart for ourselves?'”

toggle caption Nickolai Hammar/NPR

One relatively simple way to track the scale of this shift in human behavior is what’s known as the “total fertility rate.” It’s a measure that predicts how many children a woman will have during her lifetime.

To maintain a stable population — no growth, no decline — the average woman needs to have roughly 2.1 kids. In the U.S., total fertility began dipping below that 2.1 threshold decades ago, and then after 2007, fertility rates plunged rapidly to a record low of roughly 1.6.

“I don’t have a number in mind where if we hit it, I’m going to start freaking out,” said Kearney, the economist at the University of Notre Dame. “But I already look around and see so many young people are finding themselves childless, and I worry we’re doing something wrong as a society.”

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The population bomb that fizzled

The world’s rapid pivot toward declining birth rates and older, smaller populations can seem dizzying, especially after decades of warnings about the environmental harms and quality-of-life impacts of rising populations.

In the 1960s and 1970s, scientist Paul Ehrlich popularized the idea that the Earth was being threatened by what he described as a population bomb.

“No intelligent, patriotic American family should have more than two children, and preferably only one,” Ehrlich said in a 1970 interview with WOI-TV, warning that crowded U.S. cities faced a “fatal disease — it’s called overpopulation.”

Most demographers now say the population bomb has largely fizzled, and some predict that the long-term trend toward a smaller global population, with fewer consumers and a smaller human footprint on the planet, could benefit the environment.

There appear to be other upsides to declining fertility. Along with growing individual freedom and economic empowerment of women, the U.N. study also found a rapid drop in the number of girls and teenagers giving birth.

“The decline of the adolescent birth rates has been, I would say, one of the major success stories in global population health over the past three decades,” said Vladimíra Kantorová, the U.N.’s chief population scientist.

But as more women and couples delay parenthood, have fewer babies or don’t have children altogether, a growing number of nations around the world — more than 1 in 10 countries — have plunged to levels of childbearing so low that many scientists are worried.

“There’s just, relatively speaking, no children being born in South Korea,” said economist Phillip Levine at Wellesley College. According to U.N. data, by midcentury, 40% of South Korea’s population is expected to be age 65 or older.

“Nobody expected that fertility would go to these low levels,” said the U.N.’s Kantorová. “We don’t have experience with this prolonged decline. This is something new.”

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In part because people are living so much longer, the global population is expected to keep rising for decades before these trends take hold, triggering a decline by the end of this century.

But many countries, including China, Italy, Japan, Russia and South Korea, have already seen populations begin to shrink. China alone is expected to lose more than 780 million people, more than half its population, by 2100.

toggle caption Cheng Xin/Getty Images

“It’s difficult to predict whether these very fast declines, to very low fertility levels, will be happening all over the world,” Kantorová said.

How will the U.S. navigate far lower fertility?

So far, the U.S. population is relatively stable despite record-low fertility, but new data from the U.S. Census Bureau shows the nation’s fabric is already changing. Older people, those age 65 or above, now outnumber children in 11 states. That has risen sharply from just three states five years ago.

“Children still outnumber older adults in the United States, despite a decline in births this decade,” said Lauren Bowers, chief of the Census Bureau’s Population Estimates Branch, in a statement. “However, the gap is narrowing as baby boomers continue to age into their retirement years.”

A 2023 study by the Brookings Institution, meanwhile, found that without significant numbers of immigrants coming to the U.S. in the future, the country’s population would plunge by more than 100 million people this century.

“We would be losing about a third of our population between now and 2100 if there were no immigration to the United States,” said the study’s author, William Frey.

“What is our labor force going to be going forward? What is our productivity going forward?” Frey said. “We’re going to have lots of jobs, and there’s going to be nobody there to take those jobs. I think there’s going to be a lot of pressure to increase immigration into the U.S.”

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Responding to these shifts, however, some politicians, researchers and activists in the U.S., especially on the right, have begun to champion ideas and policies — known as pronatalism — designed to encourage higher fertility and birth rates among Americans.

Lyman Stone, who leads the Pronatalism Initiative at the conservative-leaning Institute for Family Studies, says the U.S. needs to do more to help families prioritize children, in part by making parenting more affordable. He supports child tax credits and policies allowing parents to work from home.

Stone believes many young people would like to have more children but are struggling to achieve the milestones they believe are necessary to begin having children.

“They’re not marrying in time. They’re not getting a house in time,” Lyman said. “They’re not getting a stable job in time. So what’s really happening is people are involuntarily falling short of their desired fertility.”

Emma Waters, with the conservative-leaning Heritage Foundation, agrees it’s time for a national conversation about birth rates and the choices families are making. “We’re going to have more adults than we have children to replace them, and that will heavily impact things like our military readiness, GDP and economic growth in the United States.”

One major concern in the U.S. will be the viability of Social Security, the nation’s most important safety-net program for older adults. The ratio of young workers to elderly retirees is already dropping to levels that alarm some economists.

Some leading American conservatives argue that declining birth rates could be catastrophic. “Let me say very simply, I want more babies in the United States of America,” said Vice President Vance during a speech at the March for Life, an annual anti-abortion rally in Washington, D.C., earlier this year.

The billionaire Elon Musk, who has fathered at least 14 children, was one of the first high-profile figures to argue that declining birth rates, in the U.S. and around the world, are a threat to civilization: “People who have kids do need to have 3 kids to make up for those who have 0 or 1 kid or population will collapse,” Musk wrote on X last month.

But Kantorová, Levine, Kearney and others said these “crisis” narratives about population decline are exaggerated and misleading. In most countries, demographic shifts are expected to play out over decades. Some nations, including France, have managed to stabilize declining fertility, albeit at relatively low levels.

Some progressives — as well as many population experts — also view conservative pronatalist policies, including opposition to reproductive rights and calls for a return to “traditional” family structures, as a threat to women.

“Some of these measures and policies can be deeply harmful, especially those related to sexual and reproductive health and choices and women’s empowerment — and that’s worrying,” said the U.N.’s Kantorová.

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But many of those same experts agree that declining birth rates are a real and pressing issue that should be addressed by thinkers and policymakers across the political spectrum.

“This demographic issue is poised to potentially remake so much of our society in ways that people just don’t seem to be thinking about,” said Kearney, the University of Notre Dame economist. “This should not be ideological.”

While scientists and politicians grapple with the declining number of children, many of the couples and women interviewed by NPR said this issue is deeply personal, private and often difficult.

toggle caption Kayla Renie for NPR

Annie Platt, age 31, who lives in South Carolina, said she and her husband, Ryan Holley, 37, have struggled with a choice that would redefine the rest of their lives.

“We’ve always kind of been on the fence like, ‘Oh, it’d be cool to have kids, and this is what their names would be,'” Platt said. “Then in more recent years, it’s been like more leaning towards no.”

Platt and other women said they see little role for the government in trying to encourage or incentivize their choices about parenthood.

“I think it’s gross,” Platt told NPR. “I feel very icked out, I guess, when I hear people like JD Vance, Elon Musk, talk about their family values and, like, incentivizing having a child.”

Platt added that she is suspicious of right-wing political leaders’ motives. “I think they just want to use women to have babies, and maybe that would also distract the mothers, or the mothers-to-be, from pursuing other things in life, maybe other career goals,” Platt said.

toggle caption Grace Widyatmadja for NPR

Sarah Brewington had similar feelings: “It feels unethical to tell people to go through a grueling process because you want to have another baby in the world.”

“Trusting individuals to make those decisions is kind of what it comes down to,” said Ben Brewington.

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Lusely Martinez, who told NPR she and her husband decided to have only one child, said she doesn’t believe the U.S. will embrace the kinds of changes — from affordable housing and health care to day care and paid family leave — that families need in order to make their lives easier.

“My biggest concern is like what is the big focus on us having children when you’re not necessarily focused on how the rest of the life of a person is?” Martinez said.

toggle caption Nickolai Hammar/NPR

Activists and scientists across the political spectrum, including those who view population decline as a grave concern, agree it will be difficult and costly to create a culture and environment where Americans return to having significantly more children.

“Absent a very dedicated response, I absolutely think it is not just possible but likely that fertility rates will keep falling,” said Kearney. “I’m a bit more worried about where we are than some other people, who are waiting to reach, let’s say, a point of no return.”

Jason Stein, Principal Trombone, Music Librarian & Personnel Manager

of the NEPA Philharmonic, speaking about the series of

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