In Finland, some thought they had cracked the code to reverse the country’s declining birth rates. The small municipality of Lestijärvi offered mothers €1,000 a year for a decade for each newborn, hoping to spark a baby boom.
More than 10 years and €400,000 later, the town’s population had shrunk by a fifth. “It wasn’t worth doing at all,” Niko Aihio, the town’s former head of education, recently told the Financial Times. “The baby boom only lasted one year.”
Lestijärvi’s story is a microcosm of a global crisis. From China to Hungary, governments are throwing money, tax breaks, and even AI-powered matchmaking at the problem of plummeting fertility rates. It’s a desperate shout: please have more babies! Yet, despite these efforts, birth rates continue to fall, leaving policymakers scrambling to avert what some have called “demographic suicide.”
In the US and the UK, birth rates are falling dramatically. In England and Wales, the fertility rate dropped to 1.49 in 2022, far below the replacement rate of 2.1 children per woman. Meanwhile, the US recorded a record low of 1.62 in 2023 — a steep decline from 3.65 in 1960.
“Demographic Suicide”
According to projections from the Institute for Health Metrics and Evaluation (IHME), the total fertility rate has more than halved since 1950. The rate dropped from 4.8 children per childbearing person to 2.2 today. Experts expect it to fall further to 1.6 by 2100. Dramatic shifts are anticipated.
The decline in birth rates is not confined to one region or continent. Two-thirds of the world’s population now lives in countries where fertility rates are below the replacement level of 2.1 children per woman. By 2100, only 12 countries — 11 in Africa and Vanuatu — are expected to have fertility rates above this threshold. Not a single country is projected to exceed 2.3 births per woman by the end of the century.
This demographic shift poses profound economic challenges. As populations age and the proportion of working-age adults shrinks, governments face mounting pressure on public finances. Healthcare costs, pensions, and social services will balloon, while tax revenues stagnate. According to S&P Global, global fiscal deficits could rise from 2.4% of GDP today to 9.1% by 2060 if current trends continue.
Why Policies Fall Short
Governments have tried everything from cash incentives to free fertility treatments, but these measures have largely failed to move the needle. In Finland, despite generous childcare benefits and “baby money” payments, the birth rate remains among the lowest in Europe. In China, the end of the one-child policy in 2016 did little to boost fertility, with most families opting to have just one child.
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While money and government support may go a long way into incentivizing couples to plan for parenthood, material things are just part of the equation. Experts point to deeper societal shifts as the root cause. Women are more educated and career-focused than ever before, and traditional expectations around motherhood have eroded. “We have a whole cohort of women in high-income countries who have been educated in a very gender-neutral way,” said Sarah Harper, a professor of gerontology at the University of Oxford. “They enter the workplace in a gender-neutral way, and then they become parents and suddenly, no matter how hard one tries, it’s not gender-neutral.”
It’s not clear which aspect weighs more. Many women are having fewer children than they would like, not because they don’t want them, but because the financial and professional costs are too high. It may just be that policies that involve material support require much more time than anyone expected to bear results.
The Immigration Solution?
With pro-natal policies yielding limited results, some experts argue that immigration is the most viable solution to demographic decline. “Migration could easily solve the problem of lower birth rates from a demographic point of view,” said Harper.
Countries like Finland have seen modest population growth thanks to an influx of foreign workers. However, immigration remains a politically fraught issue, particularly in an era of rising populism. “In the age of populism, this is a politically challenging message,” said Olli Rehn, governor of the Finnish central bank.
But even in countries with strict anti-immigration policies, such as Hungary, the reality is more nuanced. Elizabeth Kuiper, associate director of the European Policy Centre, noted that while Hungary’s government claims to have a zero-tolerance attitude to migrants, it has developed unspoken strategies for selective migration in sectors like care and healthcare.
Others suggest that raising the retirement age could help mitigate the economic impact of aging populations. In Singapore, the government is raising the retirement age and investing heavily in healthcare to ensure that older citizens can remain in the workforce. By 2030, the retirement age in Singapore will be 65, with re-employment options available up to age 70. But this, too, is deeply unpopular. In France, huge protests erupted in 2023 when President Emmanuel Macron raised the retirement age from 62 to 64. In the end, however, despite these protests, there may be no other solution.
Ronald Lee, an emeritus professor of economics at the University of California, Berkeley, noted that a growing number of older Americans are working to cover their living expenses. “I think it is fundamental for the whole world to get over the idea that older people are entitled to an indefinitely long period of leisure at the end of their life,” he told The BBC.
What About Technology?
While high-income countries grapple with aging populations, the majority of the world’s children will soon be born in low- and middle-income countries, particularly in sub-Saharan Africa. By 2100, more than half of global births are expected to occur in this region, which already faces significant challenges like food insecurity, climate change, and limited healthcare infrastructure.
Some look to technology for help. Labor shortages and budget deficits could be filled, some hope, by emerging technologies like AI and robotics that may dramatically improve productivity.
“These fertility trends have very far-reaching implications, from economic, climate change, and labor force points of view,” said Randi Goldman, an OB/GYN and program director at the Zucker School of Medicine.
“One of the beautiful things about technology is that we don’t always know exactly what’s coming around the corner and what might be globally life-changing from an economic standpoint,” Goldman added.
However, if current trends are any indication, in many developed countries real wages haven’t gone up in a long time despite corporations reporting ever-increasing productivity. If technology and its promised productivity gains are supposed to buffer the world from plummeting birth rates, then the question of income inequality becomes ever more pressing.
There Is No Quick Fix
On the upside, the shifts in fertility rates could give the planet a much-needed breather. A lower global population could ease pressures on natural resources and reduce carbon emissions. Yet, this silver lining may not compensate for the economic and social challenges posed by an aging population, and the crises that come with them.
The baby gap may not be a problem that can be solved by policy alone. It is a reflection of deeper changes in how we live, work, and envision our futures. And for now, those changes show no signs of slowing down.
As the world navigates this demographic transition, one thing is clear: there is no one-size-fits-all solution. Whether through immigration, retirement reforms, or better family policies, governments will need to think creatively — and act quickly — to address the looming crisis.
But as Lestijärvi’s experience shows, throwing money at the problem isn’t enough. “Good local services—such as libraries, swimming pools, and decent childcare — seemed more important than money in encouraging women to have babies,” said Aihio.
