How Demographic Change can Bolster Economic Performance in Developing Countries

Falling mortality rates spurred by medical, nutritional and lifestyle changes have spurred a ‘demographic transition’ in a majority of the world’s countries. As couples realize their children are more likely to survive, they need, and eventually have, fewer of them to attain their desired family size. In addition, desired fertility tends to decline as earnings opportunities improve since forgone income is such a large portion of the cost of childrearing. In the lag between mortality and fertility declines, a ‘boom’ generation is created, which is larger than both preceding and successor cohorts. As this boom generation reaches working age, the combination of a greater supply of workers and fewer dependents to support gives countries the opportunity to collect a ‘demographic dividend’. If an appropriate policy environment is in place for making the most of this opportunity, the economic benefits can be, and in many cases have been, great.