On Transiting to a Sustainable World Population: Lessons from an Overlapping Generations Model on the associated Problems, Prospects and Time Horizons

Conventional wisdom suggests the planet’s current population is roughly twice what it should be for sustainability purposes and, due to prevailing high fertility rates (the number of live births per adult female) it continues to grow. Transition to a stable sustainable population level requires lowering the fertility rate for an extended period of time, followed by a return to a rate which will stabilize the sustainable level. However, by changing its age distribution which in turn changes the configuration of its population’s needs and the ability to service those needs, switching to a persistently low fertility rate presents an economy with some short run challenges. Here, to elucidate what those challenges could be, an overlapping generations model of the life cycle age distribution is developed and the time profiles of fertility rates over the last 60 years of over 200 nations are examined to see what the prospects for, and problems associated with, achieving a stable sustainable population could be. The good news is that fertility rates are on the right trajectory, the bad news is it will be a long time coming and the path is beset with short run fiscal policy challenges.