France: The Demographic Reckoning

SAMI J. KARAM

Retirement demographics and immigration demographics are France’s two intractable challenges in this crisis.

There are many types of participants in the current French protests and riots: students, teachers, recent migrants, children of long-ago immigrants, members of the left and ultra-left, thugs and looters, populists and anti-elites etc. Telling the story through the motives of these protagonists is perfectly legitimate, even if they are not all working from the same playbook.

But there is another narrative overlaying all of these sub-plots, a backdrop that touches all of them and that brought the protests to a head. And that is the evolution of French demographics over the last half century. As these things go, the crisis blew up slowly, then suddenly.

Mass protests are frequent in France for cultural and historical reasons. That is, after all, the country that beheaded its king, and whose national motto includes the word Egalité. In the past ten years, there have been at least ten sizable waves of protests. To name only a few: in 2017, there was protest against labor rule changes; in 2018, protest by rail workers; in 2018-19, the Gilets Jaunes (yellow vests) against a new fuel tax; in 2019, climate-related protests; in 2019-20 and again in 2023, massive protests against pension reform; in 2025, protest against budget austerity; and now, protests for better education, alongside riots by troublemakers and “casseurs.”

Eugène Delacroix’s La Liberté guidant le peuple (Liberty leading the people), 1830.

The interesting thing, and topic of this post, is that the current student protests and the protests against pension reform of a few years ago run counter each other. In other words, the demands from today’s protesters are incompatible with the demands from protesters of years past.

Let me explain.

One of the key demands from today’s student protesters is an increase in funding for public education. But France is already spending on education at a rate that exceeds the OECD average, as shown in this chart. Only the Nordic countries, Belgium, Israel and the U.K. spend more, as a percent of GDP.

So, the real problem may not be the level of expenditures, but where the money is spent. The breakdown is shown in the next chart below. For every 100 euros spent by the French state on a teacher, that teacher’s take-home pay is only 38.6 euros, or about the same as the 38.4 euros pension contribution generated by that teacher.

To clarify, since the pension system is pay-as-you-go, this pension contribution is not set aside for the teacher in question; it is instead a contribution to the pension pool that is paid in the same year to already-retired teachers. One could say that this is an accounting feature and that pensions to retired teachers would be paid at the same level irrespective of the existence of this one current teacher. Nonetheless, the chart highlights the fact that the State is spending as much on retired teachers, or indeed more when you add all the components, as it is on current ones.

I am not trying to argue that the annual pension received by a retired teacher is too generous or not generous enough. That debate is beyond the scope of this post. My point instead is that a very large share of the education budget is allocated to pensions. There is, as a result, a crowding-out of the wages that are available to pay current teachers.

RETIREMENT DEMOGRAPHICS

The stress imposed by pension obligations comes from the usual two sources of demographic stress on any state’s finances nowadays, namely a lower supply of euros on one side and a higher demand for euros on the other side:

  • Supply of euros: There are in France (and in all Western economies) fewer workers per retiree because birth rates have collapsed since the end of the baby boom in the mid 1960s, as shown below with France’s total fertility rate (TFR). In 1960, the TFR was an average of 2.8 children per woman. Subsequently, the introduction of the contraceptive pill in 1967, the two oil crises of 1973 and 1979 and the legalization of abortion in 1975 all contributed to bring down the fertility rate to 1.8. Since then, it has been as high as 2.0 and as low as 1.6 where it stands today. Fewer children in the past fifty years means fewer workers today who are paying in the pay-as-you-go pension system, and therefore fewer euros.
  • Demand for euros: The retirement of baby boomers has created more demand for pensions. There are two factors in this equation: 1) the increased life expectancy of retirees, shown in the next chart, and 2) the sheer increase in the number of retirees, shown in the second chart below.

A retiree aged 65 in 1960 had about 14 more years of life ahead of him. In 1990, he had 18 more years. And today, he has 21 more years. Compared to 1960, today’s French retiree will cost the State 50% more euros (in real terms), because he will live 50% longer, all other things being equal.

This increase represents only the cost per retiree, but because there are far more retirees now than in 1960 (next chart), the pension burden on the State has exploded much higher. In 1960, there were 5 million French citizens aged 65 or older. In 2026, there are 15 million, going on 18 million by 2050.

So, the actual forward burden on the State is a lot more than a 50% increase since 1960. In terms of man-years of future obligations, annual pensions will have to support a doubling or tripling of annual payments in the next twenty-five years.

Another way to look at the supply-demand situation is the old-age dependency ratio, which is the ratio of people aged more than 64 to people aged 20 to 64 (x100 on the y-axis). It is the ratio of retirees to working people. In 1960, there were 2 retirees for every ten workers. Today, there are over 4 retirees for every 10 workers. The old-age dependency ratio has more than doubled since 1960 and will have nearly tripled by 2050.

IMMIGRATION DEMOGRAPHICS

There is another demographic component to this story. During the Trente Glorieuses, the ‘glorious thirty’ years of 1945-1975, France imported a large number of low-skilled workers because it needed to staff its factories while the economy was booming and French production was thriving. In recent years, France has again imported a large number of low-skilled workers, mostly for humanitarian reasons.

But the French economy is no longer growing at a fast rate and cannot as easily absorb and integrate the newcomers. It is beset by many problems including 1) a euro currency that is arguably too high for its industry, 2) Chinese imports that are hollowing out local manufacturing, 3) automation that requires fewer workers, and last but not least 4) a budgetary crisis that has driven up sovereign yields to their highest levels since 2002.

The protests come at a juncture when France has little maneuvering room. The fiscally conservative say that the country cannot make offers to the protesters without further damaging its finances and driving up government yields even higher, and that it cannot tax the wealthy without seeing more of them leave for friendlier jurisdictions. But the left says that both of these things should be done in order to redress rampant inequality, and that the sovereign debt can even be cancelled, or defaulted on.

This is a high stakes situation, brought about slowly at first, and then suddenly, by France’s demographic evolution in the past fifty years. For a long time, the State has lived beyond its means, as have many other rich countries (the U.S. included), and has borrowed from the future to meet the shortfall. But this configuration no longer works. At one end, there is a surplus of unneeded low-skilled workers, at the other, a rising numbers of pensioners. In the middle, the working-age population is declining in numbers (chart) and is employed in declining industries. To top it all, the government’s debt is growing to dangerous proportions.

SOLUTIONS

There are therefore three difficult challenges: 1) addressing the retirement equation and the balance between expenditures on the young vs old, 2) adopting a selective smart immigration approach to ensure integration and assimilation, and 3) re-energizing economic prospects for the working-age middle.

There are no easy fixes. France and most developed economies will likely have to raise their retirement age toward 70, except for those who are in manual labor jobs or who have physical impairments. The State will have to come up with new solutions to address the immigration issue. And France will need to adopt policies that are friendlier to wealth creators, entrepreneurs and investors.

P.S. The INSEE (Institut national de la statistique et des études économiques), France’s official statistics agency, expects the size of the working-age population to remain flat rather than decline because of small increases in the retirement age.

The Impact of Faster-Declining Fertility

SAMI J. KARAM

Jesús Fernández-Villaverde and Patrick Norrick published a paper earlier this month titled Terra Incognita: The Economics of a Shrinking World. Fernández-Villaverde is a professor of economics at the University of Pennsylvania. Norrick is a research associate at Northwestern University.

Terra Incognita, which means unknown land or uncharted territory, refers to the fast coming new world of declining demographics. The title means that recorded humanity has never been in a similar situation. Outside of wars and pandemics, we have never had such low fertility rates, and have never experienced a decline in the global population.

Demography analysts, including myself at populyst and elsewhere, have flagged this issue for over a decade, but the new paper features several new ideas worth mentioning here.

First, Fernández-Villaverde and Norrick (FV&N hereafter) state that we have already passed the point at which the world population is growing below replacement. In other words, the global total fertility rate (TFR) is already below 2.1 children per woman, the level needed to maintain the population steady (more precisely, the authors place the replacement rate at 2.2). This view differs markedly from the UN Population Division’s projection (chart) that the TFR will remain above 2.1 until around 2050. In fact, FV&N cast doubt on the reliability of UN projections beyond the near-term. See Appendix B of their paper for their theoretical and empirical evidence.

Second, as a result of lower TFRs, FV&N expect the world’s population to peak at roughly 9 billion in 2056. This is 1.3 billion fewer people and 28 years earlier than the UN’s projection that it will peak at 10.3 billion in 2084.

Third, FV&N point out that the math on fertility can shift the fertility rate by a big number even if three-quarters of women do not change their behavior. Here is how they put it (brackets and emphasis added):

Imagine a cohort of 100 women. Fifteen end up with no children, a share in line with the completed fertility of recent cohorts in Europe and the U.S. Of those 15, around 5 are childless by choice, for professional, affective, or religious reasons; another 5 never find a partner or postpone childbirth until it is too late; and the remaining 5 want children but cannot have them for medical reasons, theirs or their partner’s. Of the remaining 85, 10 have one child, 60 have two, 10 have three, and 5 have four. We stop at four to keep the example simple; very few women in younger cohorts have five or more children, and the arithmetic could be adapted to include them.

The 100 women in this population have 180 children, for a CFR [completed fertility rate] of 1.8, roughly the rate in many advanced economies until the early 1990s and in the U.S. until around 2008. And yet we are 30 children short of replacement. Look at what this population is doing: only 5 women in 100 choose to remain childless, three-quarters of all women have two children or more, and one mother in six has three or four. To reach 2.1, a population needs many families with three or more children. Families stopping at two do not deliver replacement.

Take another cohort, where the number of childless women rises from 15 to 26. Among the rest, 23 have one child, 46 have two, and 5 have three. None of the changes is dramatic: 11 more women at zero and 13 more at one. Three-quarters of women still behave as they did at 1.8, and the median number of children is still two, although barely. And yet completed fertility is now 1.3, the conventional threshold for lowest-low fertility.

Dropping from 1.8 to 1.3, then, is not a drastic change in most families. Any explanation only has to account for the quarter of women who switch, not for the 75% who do not. The key is that children come in integers. A woman at two may easily switch to one, or from one to zero, in response to relatively small changes in relative prices or opportunity costs. The integer arithmetic of the replacement rate is unpleasant.

Fourth, FV&N argue that there is an inversion of the historical relationship between income and fertility. Until now, there was a widely accepted notion that richer countries have low TFRs and poorer countries have higher TFRs, but FV&N use the examples of Mexico and Tunisia to challenge this view:

Mexico’s total fertility rate (TFR) in 2025, 1.51, for instance, is likely to be below that of non-Hispanic whites in the U.S., 1.57, despite a GDP per capita at purchasing power parity (PPP) of only around 28% of the U.S. level. Even more striking is Tunisia, whose TFR in 2024 stood at 1.45 with a GDP per capita at PPP of 18% of the U.S. level.

Mexico and Tunisia are not anomalies. In 2025, Thailand was at 0.87, Colombia at 1.01, Iran at 1.35, and Brazil at 1.52, all at a fraction of U.S. per capita income.

Fifth, the authors say that the “inversion of the historical relationship between income and fertility across countries also seems to be happening within countries,” meaning that wealthier people within countries are having more children than the average.

Sixth, FV&N speak of a first demographic transition in which lower mortality around the world brought down fertility rates, and of a second demographic transition where TFRs fall below replacement and deaths eventually exceed births.

Reasons for Declining Fertility

Finally, the researchers try to explain the reasons behind the continuous decline of fertility worldwide. They mention the following:

  • Economic fundamentals: the cost of housing and of health care, and other factors.
  • Government policies: the TFR of a country tends to rise when governments provide things like extended parental leave, cheap housing or bonus payments to large families.
  • Preferences and social norms: the authors itemize them as “the spread of individualism, secularization, women’s liberation, less interest in marriage, lower desire for descendants, or the rise of a parenting standard that makes each child more expensive in terms of time and worry.”
  • Smartphones: FV&N believe that smartphones accelerated the declines in TFRs but did not cause them in the first place.
  • Modernity: the authors write:Our conjecture is that a modern society makes the third child expensive and childlessness cheap, even when GDP per capita is only a fraction of the frontier (i.e., the U.S. level). Children are expensive because a child must be equipped to function in a world of formal knowledge and credentials, which takes years of costly investment. At the same time, children are no longer productive in the household, not even for smaller chores, having been replaced by “engines of liberation” such as the electric appliances now available even to poor households. Modernity also imposes tight career schedules, set by large-scale organizations, that collide with the biological clock and with the kin networks that used to share the work of raising children. And modernity makes childlessness cheap, because an impersonal society imposes next to no penalty on those who have no children: pensions and health care do the work that sons and daughters once did, and lineage counts for little.

Much of this aligns with my own views published last May in Explaining Lower Birth Rates in Poor and Rich Countries.

Good and Bad Consequences

I have discussed previously on this site some of the economic consequences of this new reality. They are not all negative. Instead they are a mix of opportunities and risks that will come to pass or not, depending on policy and initiative.

The Good News

FV&N write that one of the consequences of falling fertility is a 74% drop in teenage pregnancies in the U.S. between 2004 and 2024, and that this decline is welcome because three-quarters of pregnancies among American teenagers are unintended.

Other good consequences mentioned in the Terra Incognita paper are easier management of resources, and reduced pressure on infrastructure, housing and the environment.

The authors also write:

For emerging economies more generally, lower fertility opens a window of opportunity. These countries can educate smaller cohorts better, rebuild their infrastructure, and, before population aging fully takes hold, enjoy some fiscal space to facilitate structural reforms.

This refers tangentially to the potential for some countries to achieve a demographic dividend from the rapid decline in TFRs. When TFRs decline, dependency ratios also decline, as there are fewer dependents, and this in turn opens a window of opportunity for a demographic dividend. If FV&N are correct, TFRs are falling more precipitously than the UN has projected, and the opportunity window for a dividend will soon open for a large number of countries.

Readers of this site are familiar with this chart below that I first posted at populyst in 2015 and that summarizes the factors needed for a country to realize such a demographic dividend. Not all countries will be ready or able to do so, but we should hope that some probably will. I addressed this question three years ago in Demographic Dividend: Which Countries are Next?

The other good news we can derive from the Terra Incognita paper is that TFRs in Africa are falling faster than expected. This means that the working-age population of Africa will grow at a slower rate, and that the need to create millions of new jobs will be less acute than under the UN’s forecasts. In Africa: 800 million jobs needed, I discussed the enormous challenge faced by sub-Saharan economies to create adequate living conditions for the soaring working-age population. My numbers were based on the UN’s projections. The projections by FV&N mean that the challenge will be less daunting and could become more manageable.

A corollary of this is that illicit immigration from poor countries into the West could fade over the next couple of decades. If the economies of poor countries are better able to accommodate their new workers, there will be fewer people emigrating toward Europe or North America in search of jobs and better living conditions.

The Less Good News

The less good news resulting from lower fertility is that economic growth will be less robust. FV&N provide this equation:

With less demographic growth, there is less labor growth, and labor productivity growth will have to do more work in order to keep output growth steady. This could occur if AI delivers the promised gains in productivity. But the authors lean the other way, and write that labor productivity could instead decline:

Three reasons stand out. The first is the endogenous creation of ideas. The second is firm dynamism: an aging population starts fewer firms, and reallocation slows down. The third is the adoption of new technologies, which older workforces and older firms take up more slowly.

In a nutshell, fewer births ultimately mean fewer researchers, fewer ideas and less of the kind of innovation that raises productivity.

Another part of bad news is the rise in the old-age dependency ratio (the ratio of elderly to workers) that will exert more pressure on government budgets, pensions, social security and late-life medical services. All countries with retirement support programs already have stretched budgets and difficult fiscal prospects. Faster-declining TFRs will complicate this picture even more. As we are already seeing, the effects of spiraling budget deficits and debt will have deep consequences for the financial markets and economy.

Policy Will be Key

The outcome of a faster-declining global TFR is not preordained. Economies and markets are human constructs, and this means that human design can shape the outcome. Poor countries can position to increase their odds of achieving a demographic dividend. Rich countries can dampen the impact of falling demographics by lifting productivity, improving government efficiency and lowering the cost of health care. But good governance is rare and sporadic. We will not get all of this, but we will get some of it.

READ MORE on the same topic from Hannah Ritchie at Our World in Data: Which countries have already passed peak population, and when will the rest do so?

In the article, Ritchie provides this interactive map. Move the slider to see when different countries will peak in population, based on OWID’s projections.

Explaining Lower Birth Rates in Poor and Rich Countries

SAMI J. KARAM

This text first appeared in The Wednesday Letter #325 at SK Blueprints. Subscribe for weekly posts.

Why are people having fewer children today than ten, twenty and fifty years ago? The answers differ for rich and poor countries.

Looking at poor countries, in sub-Saharan Africa for example, the total fertility rate (TFR, the average number of children per woman) is still relatively high, at 4.3, but it has fallen steadily from 6.8 in 1980, thanks to improvements in women’s health care and education. When women learn how to read, when they learn the basics of taking care of themselves and of their infants, when they have access to contraception and health services, infant mortality falls rapidly, and the TFR follows it lower. In a 2015 article, I identified female literacy as the primary mover of a falling TFR. Note in the chart the clear decline in TFR when literacy exceeds 90%. Falling TFRs eventually lead to declining dependency ratios, and open a window of opportunity for a demographic dividend. I described this dynamic in Achieving a Demographic Dividend.

The causes of declining TFRs are different in rich countries, where nearly all women are literate and have access to health care and contraception. In this case, the reasons are more complex, and there is considerable debate on why the TFR keeps falling. The replacement rate, the rate at which the size of the population remains stable, is 2.1 children per woman. All rich countries are well below 2.1. The US is at 1.8.

Last week, this Financial Times chart reignited the debate by claiming that the introduction of smartphones impacted birth rates. Not everyone is a believer in this theory. In fact, most demographers who have commented in recent days have rejected it. Although the correlation is undeniable, most view it as coincidental, not causal.

As many of you know, I started focusing on demographic research in the early 2010s and also started the populyst (population + analyst) website in 2012. So, this is a question that I have thought about for a long time. In my view, one reason for a falling TFR in North America, Europe, Japan and other rich countries comes down to this: children in the past were seen as an asset, and now they are seen by some as a liability.

This sounds simplistic until you consider each of the following items.

Mid 1900s, children were seen as an asset:

  • Lower urbanization. Children helped their parents on the farm or at a small trade in rural areas.
  • Less labor mobility meant that extended families remained in close proximity to each other and assisted in the rearing and supervision of young children.
  • Fewer women were working outside the home, and men had greater job security. Financial certainty and a stay-at-home parent made it easier to have children.
  • Greater social acceptance for households that were man-woman couples with children. There was a stigma hovering over childless and unmarried people.
  • Better job opportunities, better pay and faster promotions resulted from that greater social acceptance.
  • Low cost of education and of bringing up children.

Today by contrast, some people (thankfully, not all) see children as a too-high financial liability:

  • Greater urbanization. Children do not assist parents in urban jobs. Instead, they require costly childcare while the parents are at work.
  • Atomization of the family and higher labor mobility mean that the extended family is no longer available to assist in raising children.
  • More women are working outside the home, and men have little job security. Financial uncertainty and no parent at home make it more difficult to have children.
  • There is no longer a stigma over the childless or unmarried. Social acceptance has been extended to all groups and lifestyles.
  • There is no preferential treatment in hiring for individuals with large families. Every candidate is evaluated on his/her own experience and credentials, with little concern for family status.
  • Much higher cost of education and of bringing up children.

In TWL #284, I summed up these factors by arguing that “loss of status explains our demographic decline:”

“A married heterosexual couple with children and a secure job used to be the king and queen at the apex of society seventy or sixty years ago. Society was organized to accommodate this couple, and young people aspired to achieve the same status and level of acceptance. By contrast today, such a couple 1) are just another household who chose to have children and 2) face much higher costs and a lower standard of living than the single and childless. In other words, there used to be privileges and perks extended to people with children, and now there no longer are. Having children is no longer deemed “worth it” by a lot of people, socially, emotionally and financially.”

The University of Pennsylvania’s Professor Jesús Fernández-Villaverde lays out what he calls the “unpleasant arithmetic of the replacement rate.” He says that approximately 15% of US women have no children because they cannot or choose not to, and continues:

“Of the remaining 85, 10 have one child, 60 have two, 10 have three, and 5 have four… Hence, the 100 women in this population have 180 children, for a completed fertility rate of 1.8… To reach [the 2.1 replacement rate], you need a substantial share of women to have three or more children. Two as the “normal” pattern will not get you there. And modern society makes three or more a costly proposition for most families.“

Finally, another thing to keep in mind is that the highest ticket items for a household, the home and the car, can in most cases accommodate a family of four (two parents and two children) but only rarely a family of five or more. Most homes have three bedrooms, and most cars can comfortably seat four people. Having a third child adds another layer of complexity and expense.

From Baby Boom to Elderly Boom

SAMI J. KARAM

An American born in 1945 had at the time of his/her birth a life expectancy of 65.7 years, 62.9 for males and 68.4 for females. But if that American was still alive in 2010 at age 65, his/her life expectancy was at that point 13.5 years, 12.6 for males and 14.4 for females.

An American born in 2010 had at birth a life expectancy of 78.2 years, 75.8 for males and 80.5 for females. So, the likely lifespan of an American born in 1945, if they were still alive in 2010, was about the same as the life expectancy of an American born in 2010. Given that 2.1 million Americans born in 1945 out of 2.86 million total births, were still alive in 2010, it is probable that official life expectancy at birth in 2010 (and today) was also too low by ten or fifteen years.

After all, we are talking about the state of the art of health and medicine in the years 2070 to 2100, and we have no idea what that will look like. It is possible that medical advances will move at warp speed in the coming decades and that life expectancy will leap by another ten or twenty years. It is also possible that humanity will suffer a cataclysm, as it seems to do periodically, and that life expectancy will stagnate or decline as a result.

We are now eighty years from the start of the post-war baby boom, and we can therefore expect the number of US deaths to increase annually for the next decade or more. Here is a chart showing 1) in blue, the ‘number of people born 80 years earlier,’ and 2) in red, the ‘number of 80-year olds,’ excluding the foreign-born in both cases. The lines are not parallel because only 22% of Americans born in 1910 were still alive in 1990, whereas 52% of those born in 1946 are still alive today (eighty years later). This percentage is estimated to rise further into the future. Note the big jump in the mid 2020s, which is where we are now. The number of living 80 year olds will have doubled between 2020 and 2040, not including the foreign-born.

The folks born in 1946 were all born in the same year but their deaths have occurred in different years in the past eighty years and continuing into the future. Here is a distribution of age at death in the United States in 1950 (red) and 2015 (blue). The main point of the chart is not only that the distribution has shifted to the right, meaning that people are living longer, but also that it is narrower, meaning that more people can aspire to live close to their life expectancy. See more in this Stanford University research: Life Expectancy and Inequality in Life Expectancy in the United States.

Figure 1. Distribution of Age at Death in the United States, 1950 and 2015

I previously calculated that the increase in deaths and decline in births will bring about a period of zero population growth in the US in the 2030s and 2040s, except for immigration past and future.

Three listed companies that are engaged in death care services are Service Corp. International (SCI), Carriage Services (CSV) and Matthews International (MATW).

Will Argentina and Chile’s Rightward Shift Lead to More Births?

SAMI J. KARAM

I mentioned last month in TWL #299 that the pink tide is receding in Latin America and that the continent’s political leadership was shifting to the right. On Sunday, the right-wing candidate (“far-right” according to people who only read The Guardian) José Antonio Kast won the presidency of Chile, ending the rule of socialist Gabriel Boric. When he was elected, Boric was hailed as a new page for Chile and for the continent, but his actions in office were less impactful than anticipated.

A conservative on social issues, Kast is a staunch opponent of abortion with no exceptions allowed for rape, incest, risks to the mother or viability of the fetus. Kast also opposes same-sex marriage, adoption by same-sex couples and “gender identity ideology”. Unlike his Argentinian counterpart Javier Milei who is single and childless, Kast has nine children from the same mother, lawyer María Pía Adriasola, to whom he has been married for 34 years.

A good question from my perspective is whether this rightward shift is merely the result of frustration about the economy or whether it signals a deep change of attitude toward social issues. When it comes to annual births for example, they have been declining in Chile since 1991, but they declined even faster starting in the mid 2010s.

As to Argentina, annual births have fallen off a cliff by a full third since 2015 (chart), mainly due to 1) a program initiated in 2017 to combat teenage pregnancy, and 2) the legalization of abortion in 2020.

The total fertility rate (TFR) has been falling for several decades in Argentina, Chile, and Latin America/the Caribbean, much as it has in the rest of the world. The ultimate social test of the rightward shift in politics is in the TFR and in annual births. If they stabilize or start to edge upward, we will know that the continent has turned a page, not only in politics and economics, but also in social attitudes. But because social notions are slow-moving and difficult to change, my guess is that we will not see meaningful reversals in annual births.

The majority of Latin American and Caribbean countries forbid or restrict abortions. Abortion was legalized or decriminalized in Cuba (1965), Uruguay (2012), Argentina (2020), Colombia (2022) and Mexico (2023). Other countries such as Chile, Brazil, Paraguay, Bolivia etc. allow abortions under very limited circumstances. But El Salvador, Honduras, Nicaragua, the Dominican Republic, Haiti and Jamaica have total or near-total bans.

About Nigeria Demographics

SAMI J. KARAM

The country has some, but not all, the ingredients needed for a demographic dividend.

A few days ago, President Trump posted the following in defense of Nigerian Christians:

They’re killing record numbers of Christians in Nigeria. They’re killing the Christians and killing them in very large numbers. We’re not going to allow that to happen… If we attack, it will be fast, vicious, and sweet, just like the terrorist thugs attack our CHERISHED Christians!

While it is true that Christians have been targeted by Jihadis in Nigeria, Muslims have also been targeted in large numbers. Groups like Boko Haram, ISWAP (Islamic State West Africa Province) and others oppose all forms of secularism, westernization, democracy and modernity. They seek to “purify” Nigeria by eliminating Christianity and non-Islamic practices, and by installing an Islamic regime. Boko is from the English word book, and Haram means forbidden in Arabic. So, Boko Haram means “western education is forbidden”, in particular as it applies to girls.

As shown on the map, Nigeria is both Christian and Muslim over a land area that is the size of California, Nevada and Utah combined. Approximately 46% of the population are Christian, including catholics and protestants, who tend to live in southern and coastal provinces. The other 54% are mostly Sunni Muslims who tend to live in the center and north, including in the provinces that are closest to Niger and Chad, two Muslim countries.

Trump’s implied idea that the US can be the protector of Christians in other countries is unprecedented for a US president. It is unlikely to sit comfortably with the other priorities of US foreign policy. It is also unlikely that Congress would approve military interventions or punitive missions of this kind. Christians are persecuted or face severe restrictions in a large number of countries, including most Muslim countries, North Korea and China. Here is a map of Islamist groups in Africa as of 2022, from the Italian Institute for International Political Studies (ISPI). It would be impossible to subdue all of them by force of arms.

That said, it is good that the President is paying some attention to Africa, because Africa will be the continent with the highest population growth for decades to come. Here is a chart showing Nigeria’s total population and its population aged 15 to 64. Nigeria’s population is the largest in Africa and it will surpass that of the US by 2040. Most critical is the fact that its working-age population (aged 15-64) will double by 2075.

The total fertility rate (TFR) of Nigeria is today 4.3 children per woman. This chart derived from the UN’s medium variant assumes that the TFR will fall to 2.1 by 2075. Should it instead remain at a higher level, the population growth will be even faster than is shown here.

If the TFR declines as envisioned by the UN, there will be in theory a historic opportunity for Nigeria to realize a demographic dividend and to improve its economic conditions. A demographic dividend occurs when the number of dependents to workers, the dependency ratio (DR), declines in a given country. The DRs of Nigeria and of sub-Saharan Africa are shown in the chart below. The UN medium variant expects them to fall from the high 70s (a ratio of 0.7) to about 0.5. I have argued elsewhere that China’s boom in 1990-2010 was greatly assisted by the fact that its dependency ratio fell by half. See How China Realized a Demographic Dividend. But I have also argued that many African countries will not be ready when the window of opportunity for a demographic dividend opens up. See Demographic Dividend: Which Countries are Next?

In Demographics, The Global Emergency, I identified the emergency as demographics that were too weak in rich countries and too strong in poor countries. I speculated that both rich and poor could solve their problems by working together.

The opportunity, the solution to the global emergency, is to help these younger countries improve their economies by providing them with capital and helping them strengthen their institutions. To the symbiotic solution, developed nations bring technology, capital and institutional expertise. Emerging nations bring strong demographics and a growing labor force. Working together would over time:

  • create large new demand markets for Western products at a time when domestic demand is weakening.
  • provide food, shelter, health care and jobs to growing populations in sub-Saharan Africa and other countries.
  • strengthen institutions, facilitate capital formation and investments, and increase transparency in governance in emerging markets.
  • mitigate disorganized migration, and lower the risk of instability.

This was written in 2015. The world has moved in another direction in the past ten years, with more confrontation than cooperation.

Japan’s Evolving Position

SAMI J. KARAM

This text first appeared as a section in The Wednesday Letter #296.

Things are happening in Japan. The Nikkei 225 index made a new all-time high today (chart). The country has a new prime minister, Sanae Takaichi, who also happens to be the first female prime minister and a conservative. She is described by some as Japan’s Donald Trump, and has stated that she will prioritize closer relations with the United States.

I spent a summer in Tokyo in 1989 and was enrolled in business and management classes at Sophia (Jochi) University. At the time, the 1980s Japanese bubble was in its final stages. It peaked at the end of that year and deflated in the early 1990s. There was at the time of my visit, and for years after, a lot of anxiety in the United States about Japan being the rising power that would supplant the US on the world stage. The Japanese were increasingly dominant not only in auto manufacturing but also in new technologies such as computers, semiconductors and robots. Instead, Japan entered a lost decade in the 1990s (which arguably became two lost decades in the 2000s), while the US economy and stock market raced higher.

Today the rising power threatening US supremacy is China. Now as then, there is a lot of anxiety in the United States about China supplanting the US on the world stage. There are some important differences however. First, relative to the US economy, China is much larger now than Japan was in 1990. Second, the emergence of several other countries from poverty means that China can trade with the rest of the world to a much larger extent than Japan did in the 1990s. Third and perhaps most important from a US perspective, Japan was and remains a strategic ally of the United States, whereas China is at best a competitor and adversary, and at worst a future enemy in a kinetic war.

It is possible that China’s rise will stall or decline in future decades, much as Japan’s stalled in the 1990s, but we cannot assume that it will. Chinese policymakers are shrewd and have studied the lessons of Japan and also of the Soviet Union to avoid the same loss of prestige and hegemony. We should assume until proven otherwise that China’s power and economy will continue to grow and that they will increasingly challenge US interests.

The revival of Japan’s stock market, economy and governance is therefore a welcome development from the point of view of the United States. Japan and China have been enemies in the past and eye each other today with wary suspicion. Further, Japan has close relations with Taiwan and will be compelled to defend Taiwan if China tries to forcibly take over the island. We can see the contours of deterrence forming in Northeast and Southeast Asia. The US and its main regional allies, Japan, the Philippines and South Korea, are all preparing for an eventual conflict. It is possible that, in the event of a shooting war, Vietnam and other countries would join the US side.

As of today, Japan’s armed forces are not very large but they are large enough to make Chinese strategists incorporate them in their calculus of a Taiwan invasion. Takaichi has vowed to increase defense spending, and will likely show a greater disposition to stand up to China, two shifts in policy that may bolster deterrence and help avoid a shooting war. It is worth noting that China has not congratulated Takaichi on her appointment as prime minister.

Meanwhile, the Japanese economy has several challenges to deal with. One is the government’s high level of indebtedness at 230% of GDP, the highest in the OECD. Another is the country’s fading demographics. Japan is getting older and its population is shrinking. This first chart below shows the median age in Japan, China and the US. Japan’s current median age is 49.8 years, vs 40.1 for China and 38.5 for the US. The median age is rising in all three countries, and fastest in China. In 2050, the median age will be 52.8 years in Japan, 52.1 in China and 41.9 in the US. The total Japanese population peaked in 2010 at 128 million. Since then, it has declined to 123 million and is expected to drop to 105 million by the year 2050.

Naturally, the combination of aging and a shrinking population will have a greater impact on the size of the working-age population. This is shown in the chart below. The population aged 15 to 64 peaked in 1995 at 87.6 million and has fallen to 72.3 million in 2025. It is expected to continue falling to 53.9 million in 2050. This is a decline of nearly 40% since the year 2000. Under a traditional economy, this precipitous fall would cause great concern. But under a new AI-driven economy that requires fewer workers, it is possible that Japan will avoid the employment difficulties that other economies will encounter.

Also critical for the economy is the rise of the dependency ratio, the ratio of dependents (children and the elderly) to workers. The dependency ratio will rise in Japan, China and the US (chart below), but Japan’s shows the most dramatic profile and most extreme climb between now and 2050. I have written elsewhere that China owed a large part of its economic boom to a halving of its dependency ratio between 1975 and 2010, but this trend has now been thrown in reverse. The dependency ratio in China is rising and has created headwinds for the Chinese economy.

Note in the chart below how the dependency ratio bottomed close to an economic peak in all three cases: in Japan around 1990, in the US around 2008 and in China around 2010. This is at the very least an interesting coincidence.

When we consider the three pillars of wealth creation per the populyst model, Innovation & Productivity, Demographics & Health and Governance & Society, Japan seems well positioned in all three. The country’s demographics have been a major concern but they may in fact yield unexpected advantages in an AI world.

New Compilation: Demographics, The Global Emergency

SAMI J. KARAM

I finally selected and compiled my posts and articles in a new book, Demographics, The Global Emergency, which I am pleased to introduce here and now.

The articles deal mainly with the populyst three pillars of prosperity and good governance: Demographics & Health, Innovation & Productivity, Governance & Society.

Many were first published on this site. Others first appeared at other media.

Except for a brief introductory “Perspective from AI”, all of the posts and essays in the book were written the old-fashioned way, without AI assistance. Indeed, nearly all were written before ChatGPT and other LLMs even existed. Here is the Table of Contents. Thanks very much for your interest.

Copyright © 2025 populyst. All Rights Reserved.

Peak Child: The Number of Children Aged Under 5

SAMI J. KARAM

According to the UN, the global number of children aged under 5 has already peaked and is likely to fall for the rest of the century. But the number in sub-Saharan Africa will continue to grow until 2070.

Note: This article first appeared in The Wednesday Letter 206 earlier this month. Please subscribe to the substack to receive all Wednesday Letter postings including Geopolitics on Mondays and Twelve Charts This Week on Fridays.

How many children aged under 5 are there in the world? And is that number growing or falling? According to the UN’s “medium variant” estimate, it rose until 2017 when it reached 690.4 million, and has been falling ever since. The late Hans Rosling called this ‘Peak Child’.

The UN has several demographic scenarios for the future. The most probable is what it calls the “medium variant”. There are also, among many more, a “high variant” and a “low variant” derived from assumptions of higher and lower fertility. Here, in the first chart, is the global number of children aged under 5, with each of the three variants. According to the most probable scenario (the medium variant), that number will more or less flatline above 650 million until 2060 after which it will fade down gradually to 560 million in 2100. The less probable high and low variants are also shown, with the first racing to nearly 1.1 billion and the second falling to 250 million by 2100.

It is important to underscore that all three variants assume a continuing decline in fertility (the number of children per woman) around the world, in particular in sub-Saharan Africa where it remains elevated. Here is the same chart for sub-Saharan Africa. Under all three variants, the number of children aged under 5 will continue to grow until at least 2050 (low variant), 2070 (medium) or beyond 2100 (high). The numbers themselves are quite large, 185 million today, and 250 million in 2070 per the medium variant.

Sub-Saharan Africa is the most demographically dynamic region of the world. Europe is the least dynamic. Here is the chart for Europe. The number of children aged under 5 peaked in 1962. Note the big dip in the 1990s after the fall of the Soviet Union. European fertility has been well below replacement for a long time, which means that both the overall population and the working-age population will shrink. This retrenchment is not all due to Eastern Europe. The rest of Europe is also in demographic decline. The numbers are relatively small, 35 million children under 5 today and 25 million by 2100 per the medium variant.

Now here is something to make you pause. If we take the last two charts and combine them in a ratio of sub-Saharan to European children aged under 5, we see that this ratio (the number of sub-Saharan children under 5 for every European) rose from less than 1 to 1 in 1950 to 5.3 to 1 in 2023. Under the medium variants for both regions, it is expected to rise to 7.6 by 2050 and 9 by 2075. The consequences of this change will be significant. We are seeing them already with increased migration numbers from south to north.

If you are wondering about North America (includes the US and Canada but not Mexico), here is the chart. The number will remain essentially flat between 20 and 22 million. However, this does not account sufficiently for illegal immigration. It is likely that the number of children aged under 5 will rise to above 25 million in some future years. All the same, North America numbers are small compared to the boom that is taking place in sub-Saharan Africa and parts of Asia.

China After the Dividend

SAMI J. KARAM

This article is the second in a series and was published at Exante Data’s Money Inside and Out. Read the first of the series, How China Realized a Demographic Dividend.

Will it overcome its demographic decline?

In a recent post, we described China’s unprecedented success at realizing a demographic dividend starting in the 1990s until around 2010. We discussed the confluence of factors that made this dividend possible. In this post, we look at present conditions and try to discern what is in store for the future. We use our usual approach and look at the three main pillars of wealth creation: Demographics & Health, Innovation & Productivity, Society & Governance.

Demographics & Health

The first thing that is evident is that demographics is no longer a positive vector of economic growth. 

The tailwinds created by a falling dependency ratio have died down and are now expected to turn into headwinds (see chart in our first post). The dependency ratio fell between 1970 and 2010 and was a key driver in the country’s GDP acceleration in that it opened a window of opportunity to realize a demographic dividend. China was able to realize that dividend because 1) it had liberalized its economy and opened up to trading with the world, and 2) it had improved its levels of education and infrastructure. As things stand today, the dividend has been fully realized and is behind us. There is instead a risk of a reverse demographic dividend, in which deteriorating demographics create a drag on growth, if China is unable to implement counteracting measures.

This risk is illustrated in the first chart below which shows the Chinese population by age groups. The population aged 15 to 64, aka the working-age population, soared between 1965 and 2015 and is now set to decline, slowly for the next decade but more rapidly thereafter. Meanwhile the population aged 65 and over will more than double between now and 2055. Finally, the youngest group aged 0-14 will taper off for decades to come.

Using the same data, the next chart shows the difference between the number of workers (those aged 15 to 64) and the number of dependents (those aged less than 15 and more than 64). The coming decline is as dramatic as the rise was in past decades. In 2015, there were 636 million more workers than dependents. But by 2055, this figure will fall to 189 million, or about the same as in 1980. Yet during this period, 1980-2055, the total Chinese population will have grown from 1 billion to 1.37 billion. (See in this article how the working-age population of other countries will have evolved between 1960 and 2050).

In addition to the longer term rise in the dependency ratio, China is seeing more recently a decline in its birth rate. China’s total fertility rate (TFR) fell to 1.09 children per woman in 2022, a new low in a recent downtrend that started after 2017. The next chart shows the evolution of the TFR since 1950. Note that it had fallen from over 6.0 to 2.75 before China enacted its one-child policy in 1980. Between 1991 and 2019, the TFR hovered between 1.5 and 2.0 but it fell below 1.5 in 2020 and fell again in 2021 and 2022.

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