Falling Birth Rates Don't Hurt GDP Growth, Study Finds

A new study by Daron Acemoglu, David Autor, Keelan Beirne, and Andrew Scott challenges the conventional wisdom that aging populations inevitably slow economic growth. Analyzing cross-country data from 1950 to 2020 and US commuting zones, the researchers find no negative impact of lower birth rates on aggregate GDP or earnings growth. Instead, countries with lower birth rates show higher GDP per working-age adult, and US regions with lower birth rates experience faster wage growth. The key mechanism is technology: labor scarcity induced by demographic decline spurs innovation and adoption of labor-saving technologies, such as robotics. For example, China, facing a projected population decline of those aged 15-64 from 1 billion to 300 million by 2100, has doubled its industrial robot count between 2021 and 2024, now accounting for nearly 50% of the global stock. The study also uses WWII casualties as a natural experiment, finding that military deaths (which reduce the younger workforce) predict higher future GDP per worker, while civilian deaths do not. The authors caution that future demographic changes may be unprecedented in speed and scale, but historical data suggests current pessimism is premature.