South-Western College Publishing - Economics  
Maybe Wanting the Global Population to Fall Wasn’t Such a Good Idea After All
Topic Environment and the Economy; Government and the Economy
Key Words Population, fertility rate, growth rate, natural resources
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Reference ID: A166826905

News Story Demographers used to think that the global fertility rate – the average number of children a woman will have in her lifetime – would fall below the population replacement rate by 2025. That’s already happened to about 45% of the global population. As a result, population growth will begin to shrink, but in some places of the world, population will actually decline. That may not be a great outcome.

We used to be concerned about a Malthusian relationship between population and natural resource consumption, in which population growth would tax natural resources to the breaking point. As population growth falls, though, natural resource usage will decrease as well. This is a good thing.

This could be a problem with our workforce, though. If population is falling, then there are fewer people who can replace us in the workforce. There will be fewer workers, fewer farmers, and fewer soldiers. All of this changes the economic dynamic globally, as we must move toward greater automation to counteract the reduction in labor.

In the labor market, governments may do well to think about replacing seniority as a driving factor in salaries, instead using productivity. In addition, firms should eliminate mandatory retirement age policies. Engaging in programs like these will result in a more productive workforce, as the less productive go on to better opportunities (possibly including retirement), and those who are able to work, can continue to do so, and with higher incomes. Better child care policies and parental leave would also go far to helping people confront the battle between home and work.

Questions
Discussion Questions:
1. Is it necessary that automation must increase in production in order to combat the declining population numbers? Why or why not?
2. Suppose the government implemented a policy in which child care was 90% subsidized by the state, and was folded into the public education system. Why might a comprehensive child care policy help alleviate the problems identified with falling population?
3. As the population growth continues to decline, what will be the impact on the price of natural resources, e.g., a barrel of oil?
Multiple Choice/True False Questions:
1. The article summary implies that as the fertility rate falls below the replacement rate, population must necessarily begin to fall.
  1. True
  2. False
2. Using productivity instead of seniority as the driving component behind wage determination would ________ the relative wage paid in the market.
  1. Increase
  2. Decrease
  3. Not change
  4. Insufficient information to answer the question.
3. With no change in government policies, a reduction in population will cause the ________ to change, and the wage to ________.
  1. Supply of labor; rise
  2. Supply of labor; fall
  3. Demand for labor; rise
  4. Demand for labor; fall
Source “How to Deal With a Falling Population.” The Economist, July 26th, 2007.
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