TY - JOUR AU - Bloom,David E. AU - Canning,David AU - Fink,Günther AU - Finlay,Jocelyn E. TI - The Cost of Low Fertility in Europe JF - National Bureau of Economic Research Working Paper Series VL - No. 14820 PY - 2009 Y2 - March 2009 UR - http://www.nber.org/papers/w14820 L1 - http://www.nber.org/papers/w14820.pdf N1 - Author contact info: David E. Bloom Harvard School of Public Health Department of Global Health and Population 665 Huntington Ave. Boston, MA 02115 Tel: 617/432-0866 Fax: 617/432-6733 E-Mail: dbloom@hsph.harvard.edu David Canning Harvard School of Public Health Department of Global Health and Population 665 Huntington Ave. Boston, MA 02115 Tel: 617/432-6336 Fax: 617/566-0365 E-Mail: dcanning@hsph.harvard.edu Günther Fink Harvard School of Public Health Department of Global Health and Population 665 Huntington Ave. Boston, MA 02115 E-Mail: gfink@hsph.harvard.edu Jocelyn E. Finlay Harvard School of Public Health Department of Global Health and Population 22 Plympton Street Cambridge, MA 02138 Tel: 617-432-1232 E-Mail: jfinlay@hsph.harvard.edu AB - We analyze the effect of fertility on income per capita with a particular focus on the experience of Europe. For European countries with below-replacement fertility, the cost of continued low fertility will only be observed in the long run. We show that in the short run, a fall in the fertility rate will lower the youth dependency ratio and increase the working-age share, thus raising income per capita. In the long run, however, the burden of old-age dependency dominates the youth dependency decline, and continued low fertility will lead to small working-age shares in the absence of large migration inflows. We show that the currently very high working-age shares generated by the recent declines in fertility and migration inflows are not sustainable, and that significant drops in the relative size of the working-age population should be expected. Without substantial adjustments in labor force participation or migration policies, the potential negative repercussions on the European economy are large. ER -