The economics of the baby bust with Jesús Fernández-Villaverde
Deep Dives
Explore related topics with these Wikipedia articles, rewritten for enjoyable reading:
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Total fertility rate
10 min read
The article centers on fertility rates (0.7 in South Korea, 1.2 in Spain/Italy) but readers may not understand how TFR is calculated, what replacement level means, or how it differs from birth rate. This foundational concept would deepen understanding of the demographic crisis discussed.
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Aging of Japan
11 min read
Japan is presented as the paradigmatic case and 'best-case scenario' for handling demographic decline. This Wikipedia article covers the specific policies, social adaptations, and economic consequences that Fernández-Villaverde references, including the 2004 pension reforms mentioned in the interview.
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Shrinking city
12 min read
The interview discusses 'sponge cities' where some areas lose 30-40% of population while metros grow. This phenomenon of urban shrinkage—with its consequences for infrastructure, schools, and hospitals—is a key concept that would help readers understand the uneven spatial effects of population decline.
Why are birth rates plummeting across the developing world? Why should we even care about low birth rates? Where can we find the most elastic baby? Jesús Fernández-Villaverde, Professor of Economics at the University of Pennsylvania, explains why Japan’s decline might be the best case scenario, the case against studying David Hume, and why the real fertility crisis isn’t in rich countries.
You can find Jesús on Twitter where he tweets about on economics, history, and demographics, and read about Korea’s fertility crisis in the new print edition of Works in Progress
If you want more from Works in Progress you can read the magazine here or listen to our episode with Alice Evans here. You can watch or listen on YouTube, Spotify, or Apple Podcasts.
Transcript:
Sam Bowman: Our guest today is Professor Jesús Fernández-Villaverde, who’s Professor of Economics at the University of Pennsylvania. Jesús is one of the most wide-ranging economists in the business today, but today we’re going to focus on the economics of fertility and falling birth rates. Jesús, I want to start by asking you, from an economics point of view, why should we care about declining birth rates, given that we don’t think that smaller countries are necessarily going to be poorer than richer countries? Why do we think that declining birth rates are a problem?
Jesús Fernández-Villaverde: Like everything in economics, low fertility is a complex phenomenon that has good things and it has bad things. I don’t want to give the impression that everything is bad; there are also some good aspects to it. But mainly, when you have fertility rates that are really very low – think about South Korea around 0.7, China slightly above 1, Spain or Italy around 1.2 – what you face is a big demographic cliff: a fast decline in population unless you have large flows of immigrants. That has consequences for total GDP growth.
There are many important aspects in society, such as social security payments or ability to service public debt that depend on the total size of GDP. It’s not as much that we want to have a large population per se, but that we have made commitments in the past in terms of social security benefits and in terms of public debt that depend on the total size of the population.
Sam Bowman: Imagine if we were a ...
This excerpt is provided for preview purposes. Full article content is available on the original publication.