Policy Responses to Population Decline and Ageing

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It is also important to consider that in the world there is one billion people living in the developed 
countries and five billion people living in poorer countries, so future migration is determined by 
politics not only of rich countries. 
 
II. DEMOGRAPHIC TRENDS AND PROSPECTS 
 
During the New York meeting, Ms. Zlotnik
2
 assessed that, despite the fact that the population 
pyramids for the less developed countries are expected to change even more quickly, the issue of 
ageing concerns more the developed countries. There are actually 21 countries that are witnessing a 
population decline, they will become 58 by 2050. It is the first population reduction during the 
times of economic prosperity. 
 
The median age, in the developed regions, has changed and it will move from 38 years in 2000 to 
46 years in 2050. In the less developed countries, median age will change from 24 years in 2000 to 
37 years in 2050. This is calculated assuming a Total Fertility Rate (TFR)
3
 stabilization at about 1.7 
to 1.9. If the TFR declined to 1.5 the median age in 2050 would be 53 years and the working age 
population (WAP)
4
 in 2050 will have declined in absolute terms.  
Some experts have pointed out the methodology trough which these data have come from. The 50 
years time-span projections was considered to be too long. None, for example, forecast the start or 
the end of a baby boom, concerning migration the previsions for only 5 years is already a difficult 
task. Thus, there are big differentials between the forecasts of migration of the United Nations and 
those of the European Union. The former account for about 200.000 migrants between 2020 and 
2025, the latter accounted a minimum number of 660.000 per year. Some experts say that even if 
fertility is not forecast correctly, it would not change much the outcome of the projections, because 
the current age structure is the main factor.   
At the opposite side, developing regions are expected to increase their population bases. How much 
potential there is for movement from the developing to the developed regions? In the 1990s, 
migration from developing regions accounted for half the growth in the developed regions, and in 
the period 1995-2000, 61 percent of the growth in developed regions derived from migration. 
Some participants at the conference suggested studying the problem at a global level, in order to 
uncover overpopulation problems in some areas and lack of resources in other areas. In fact, the 
                                                 
2
 Director of the Population Estimates and Projections Section of the Population Division, United Nations. 
3
 TFR= The average number of children that a woman gives birth to in her lifetime, assuming that the prevailing rates 
remain unchanged 
4
 Working age population =  Population aged 15 – 64. 
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world population is still increasing fast, while stabilization, decline and low fertility are actually 
necessary for the survival of the planet. So, this situation might be detrimental for the developed 
countries, but beneficial for the world as a whole. It seems like we have grown up in a culture 
where population growth is the norm, but this does not have to be so. Population stabilization or 
even decline might be the norm, and our era of population growth may be exceptional. 
Several experts think that the big unknowns for social security systems are economic, not 
demographic. In this sense, a key issue is the labour productivity.  
Migration, in fact, would not be needed if productivity increased at a rate of 4-5 percent per year, 
but this depends on the speed of technological innovation.  
If the fertility increased in the next 20 years, the labour effects will only be felt from the 2040. 
Moreover, the opportunity costs of having children increase when real income increases. If this is 
true, the fertility will decline even more. Participants that agreed with this view argued that in 
projection analysis demography alone was not sufficient and urged for the inclusion of economic 
and social theories. 
 
However, fertility differences cannot be explained by economic theories: for instance, fertility was 
lower in countries like Italy and Spain with a lower opportunity cost than in the United Kingdom. 
This demonstrates that there are quality issues involved. 
 
The impact of population decline is contentious. Some experts think that demographers are 
underestimating the impact of population decline on competitive advantages as population decline 
has serious repercussions for the entire business community. 
 
III. CONSEQUENCES AND PROBLEMS 
 
At what extent Governments should be concerned about population decline and population ageing 
depends on several factors and can have different point of views. 
 
There are different types and levels of below-replacement fertility. From the modest cases, which 
require slight revisions in population policy, to the most extreme cases, which threaten the structural 
bases and compromise the future society. 
 
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In demographic terms, we should consider reproductive potential consequences, that is the number 
of women in reproductive age (20-35, in practice) is declining. So, the number of births is declining 
while the number of deaths is increasing, due to the age structure becoming older. This creates a 
natural deficit, and the older part of the population will double its proportion while the base of the 
pyramid becomes smaller. This creates an inversion of the age pyramid. 
 
In terms of non-demographic consequences of population decline and population ageing there is a 
fiscal debate about retirement pensions and social security systems. In many countries the social 
security systems constitute a significant proportion of the GDP: in Italy, for instance, in 2005, it was 
the 15,16%
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. There is a debate about the policy responses to this situation: some experts say it is 
necessary to increase participation rates and employment, others say the solution is to increase 
productivity. 
Even if productivity increase cannot be expected to solve ageing problems as it usually comes with 
young people. Furthermore, productivity increase cannot solve the problem if pensions will still be 
indexed on the wages. As well as the increase in the labour-forces participation can have only a 
short-term effect, and thus cannot be a long-term solution. 
There are also political and cultural consequences of ageing (namely conservatism). 
Migration does not necessarily meet labour-market needs or solve pension problems, since migrants 
will eventually become receivers as well. However, it is questionable if it is possible or ethical to 
select migrants. 
Regional and sectorial issues need to be considered, because unemployment and labour shortage 
can occur simultaneously, as it is the case of Italy, due to the differences in quality levels of the 
demand and of the supply of work, being the former lower than the latter.  
The crisis can have two points of view: a political one (in terms of resources redistribution), or an 
economic one. Those who think the crisis is political argued that productivity does not resolve 
problems of how to share the societal pie. Those who think the crisis is economic noticed that 
ageing, trough the reduction in the number of young people, is the major cause of economic 
recession. 
 
                                                 
5
 Istat, 2006.