Europe Is Running Low on Children – Real Time Economics

Children. They’re our future, or so that song from The Simpsons asserts, over and over again.

If that is so, and it seems obvious that it is, then the eurozone economy may be heading into a rather bleak couple of decades.

Figures released by the European Union’s statistics agency Thursday show the 28-member bloc  is running low on children, a trend that is set to continue. People aged less than 15 years accounted for 18.6% of the population in 1994, but just 15.6% in 2014. Eurostat estimates the rate of decline will slow in the coming decades, but just 15% of the population will be children in 2050.

The situation is even more daunting for the eurozone’s economic powerhouse, Germany. From 16.4% of the population in 1994, children now account for just 13.1%, the lowest proportion in the bloc, and that share is set to fall further, to 12.7% in 2050. In Ireland, which has the highest share, children account for 22% of the population, but that too is set to fall.

The fact that the bloc’s population is set to age rapidly, and that actual population decline is set to be severe in Germany, is not a new revelation, even if the figures on children bring it home in a fairly stark manner.

Children are the workers of the future. And with people living longer, those future workers will each have to support a larger number of retirees.

Some economists have concluded that the eurozone may have little choice but to encourage higher levels of immigration if it is to avoid decades of very low economic growth that will leave it with high levels of debt.

The currency area’s growth prospects look a little brighter in early 2015 than they have in many years, and that is reflected in the relatively upbeat tone adopted by European Central Bank President Mario Draghi during his news conference Wednesday.

But in a recent paper Kieran McQuinn at Ireland’s Economic and Social Research Institute, and Karl Whelan at University College Dublin, estimate that a decline in the eurozone’s working age population in the absence of economic reforms will limit annual economic growth to an average of just 0.6% over the coming decade. And it gets worse—in subsequent decades, the eurozone economy would grow even more slowly, and by just 0.3% between 2044 and 2060.

It’s a little to late to do much about the coming decade. But in addition to prodding governments to pursue growth-boosting reform, Mario Draghi might have to consider urging Europeans to start making more Europeans.

 


 


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16 April 2015 | 1:28 pm – Source: blogs.wsj.com

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