Fertility and prosperity : links between demography and economic growth

The present study reports on results emerging from the research project «Fertility and Prosperity: Links between Demography and Growth» that was commissioned to the Ifo Institute by Deutscher Arbeitskreis für Familienhilfe e.V., Kirchzarten, in December 2003. The study adopts a two-stage research strategy, comprising (a) a broad-based econometric investigation regarding potential long-term consequences of demographic change for the economic performance in developed as well as developing countries and (b) a survey of fertility outcomes and family policies in a limited number of developed countries. The results indicate that the decline in fertility observed in the past, through its impact on the size and age-composition of the labour force, may have a substantial negative impact on the growth of aggregate output, output per capita and productivity in countries that are strongly affected by this trend. At the same time, our econometric results confirm that increasing fertility rates in countries where they are currently low is mainly a matter of the existing institutional framework and of related policy decisions. This is further demonstrated through an in-depth discussion of a wide range of policy measures applying to families and children in Germany, France, the UK, and Sweden.