The world’s top 10 economies are confronting a demographic dilemma: fertility rates have slipped below the replacement threshold of 2.1 children per woman, raising the prospect of shrinking workforces, aging populations, and growing economic strain.
Data from the United Nations Population Division shows that countries as different as China, Germany, Japan, the United States and India are converging toward the same line: below replacement, with no sign of reversal.
The question now is how governments can soften the economic shock as shrinking workforces are left to support ever-larger retiree populations, straining pensions, healthcare systems and social safety nets.
Why Birth Rates Are Falling
Experts point to a mix of economic, cultural, and policy factors. In high and middle-income countries, women are delaying marriage and childbirth while balancing careers. Rising housing costs, childcare expenses, and uncertainty about jobs and health care weigh heavily on young families.
In the United States, fertility dropped to a record 1.59 in 2024, an all-time low amid the rising cost of living and as a growing share of women delayed childbearing.
China, meanwhile, is living with the long shadow of its one-child policy, which was eased to a two-child rule in 2016 and then to a three-child policy in 2021 in a belated push to boost births.
Decades of restrictions pushed fertility rates far below replacement, and despite later efforts to loosen controls, births have continued to fall. Some provinces now report fertility below 1.0, raising fears of a demographic crisis compounded by rapid aging and limited immigration.
Immigration as a Safety Valve
Immigration has helped soften the blow in North America and Europe. The U.S. has long relied on immigration to offset population aging. Canada is targeting 395,000 new permanent residents this year. Germany has eased visa rules for skilled workers in the critical fields of health and technology.
By contrast, Japan and China admit relatively few foreign workers, leaving them with fewer demographic lifelines, though Japan has in recent years adopted more immigrant-friendly policies and last year reported an all-time high of 3.77 million foreigners, or approximately 3 percent of the population.
Supporting Families With Childcare and Leave
Several governments are trying to make parenting affordable. France and Nordic countries, pioneers in subsidized childcare and paid parental leave, maintain relatively higher fertility than peers.
President Donald Trump in February issued an executive order aimed at cutting the cost of in-vitro fertilization and has floated “baby bonuses.” However, critics say these steps fall short without broader childcare and health-care reforms.
“This president has had endless opportunities to support those tried-and-true, proven policies that lift families and our economy, but his administrations have utterly failed to do so,” Kristin Rowe-Finkbeiner, CEO of social welfare organization MomsRising, told ABC.
Tackling Economic Insecurity
Youth job insecurity weighs heavily in Italy and Spain, which face high youth unemployment, discouraging family formation.
Stubbornly high unemployment among under-25s in post-pandemic China has driven the government to change its methodology and effectively under-report that statistic. Economic uncertainties, changing generational attitudes, and a “996” work culture (9 a.m. to 9 p.m., six days a week) are also oft-cited deterrents.
India, the world’s most populous nation, is also in the sub-replacement camp with a fertility rate of 1.9 as of June, per the UN Population Fund. While still demographically young, experts warn its “window of opportunity” could close in the coming decades.
“We have the capacity to tap into the potential of the youth population but we need to invest in adolescent education, health and sexual health right away if we want to reap the benefits, Poonam Muttreja, the executive director of Population Foundation India, told the BBC in a 2022 interview.