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Fertility Declines and Youth Dependency: Implications for the Global Economy

Alif Arbatli, Delia Velculescu, Hamid Faruqee, and Ralph C. Bryant

Mortality rates for infants and children fell sharply for much of the 20th century, while life
expectancy increased for adults. Somewhat later fertility rates began to decline, first in developed
nations and more recently in developing countries. These major demographic shifts have already had
significant effects on the age structure of the populations of most of the industrialized world, reducing
the number of youths relative to adults. The transition will continue into the 21st century. The
populations of most developed nations will have much higher elderly dependency ratios in the coming
decades. After varying delays, further declines in fertility and a progressive aging of populations will
occur in developing nations as well.

Japan is the most prominent example of an industrial nation whose fertility rates have fallen
and whose population is aging. Between the end of World War II and the end of the 20th century,
Japanese fertility declined from over 4 to some 1.4 lifetime births per woman. The share of youths in
the total population fell from over 45 percent to less than 21 percent between 1950 and 2000.
Projections for the share of elderly in the total population show a near doubling over the next five
decades from 17.2 percent to 36.9 percent. The dramatic nature of Japan’s demographic shift relative
to developed countries as a whole can be seen in visual terms in Figure 1, based on the revised UN
projections released in 2001.

Changes in youth dependency are even more important for developing nations. For several
decades after 1950, youth dependency in many developing nations actually increased substantially.
Projections for the 21st century tend, however, to show marked falls in fertility, declining youth
dependency, and eventual population aging – though lagging behind by several decades the
experiences of developed nations.

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