Yes! You read that right. No! Interstellar is not happening in real life.
Global population growth rates have been falling as a result of birth control policies in the emerging world in the 70’s. In terms of raw numbers, the population of the world has been growing. This is largely due to advances in science and medicine resulting in longer lives. The average human life continues to rise from 50 in 1969 to 69 and is still rising. However, the population of people that drive economic growth (working age people) continues to shrink. Fertility rates in India have fallen from 5.87 in 1960 to 2.5 in 2012. Once this number reaches 2.1, the population will start to shrink.
While economic growth can never be credited to a single factor, a sizable working age population is critical for economic growth. In the boom periods in the late 20th century the growth rates of labor forces in most major booming economies were high. That number has fallen to well below 2% as of 2010. However, a population boom does not necessarily mean an economic boom.
A shrinking working population growth rate amidst a rising population is the worst possible combination for an economy looking to grow. The first response has been to produce more babies with governments (mostly in developed countries) incentivizing childbirth. In Japan, Prime Minister Abe proposed easier access to childcare and tax incentives and proposed making it easier for women to get back to work after childbirth. Policies ranging from paternity leave in the UK to paid leave in Germany are a step in the right direction but are yet to bear fruit.
A better approach to stop the labor force from falling is to bring back retired employees to work. Owing to better healthcare people often remain active well into their 70’s and are forced to be without work. Including retired employees back in the labor force may help in solving the expensive pension funds worldwide.
Another pool of untapped talent resides with the working age women in any country. While some countries have realized the potential impact of including women in the work force, most others are yet to wake up to this idea. Japan, Canada and the Netherlands have managed to attract an increased participation from their women owing to campaigns promoting working women. In India, the participation rate has fallen from 35% in 1990 to 27% in 2014.
For every nation that suffers from brain drain (top educated students immigrating elsewhere) there is one that benefits from brain gain. The United States is perhaps the best example of a country that gained immensely from brain gain. The immigrant population is 13.3% of the total population of the United States. More than half of the top 25 firms in the Silicon Valley were founded by first or second generation immigrants (Apple, Google, and Amazon). Given the anti-immigrant sentiment prevailing in the US currently, Silicon Valley faces the risk of losing out on the best talent. The US has increased the number of student visas in the past decade but the number of work visas remained constant as a result of which a large number of students have been sent to their home nations. Canada’s minister of immigration, Jason Kenney in 2013 said Canada was ‘open to newcomers’ which will help to balance Canada’s aging population and to its own benefit that sentiment has been carried forward in the Trudeau administration.
While most nations actually need immigrants, fears of outsiders stealing jobs makes for policies against immigration rather than welcoming it. In 2015, Donald Trump proposed to build a wall on the Mexican border with Mexico paying for the wall. What Mr. Trump and those supporting him may have overlooked is that, in the years leading up to 2015, net migration from Mexico had fallen to zero.
The impact of a population decline will continue to unfold in the years to come. We have been slowly waking up to this prospect. The nation’s best poised to grow in future will be the ones that have a sizeable working age population and the ones welcoming women, immigrants and the elderly into the labor force.