Approximately half the world's population now has replacement-level fertility or below. The UK experience in accommodating to a changing dependency ratio provides some generalizable insights. A mechanistic approach assuming a fixed retirement age and a need to raise fertility or increase immigration in order to maintain pensions at a fixed proportion of the gross domestic product (GDP) is overstated and wrong. It needs to be replaced by a welfare optimizing model, which takes into account the increasing years of healthy life, a slow rise in the pensionable age, capital inheritance and wider welfare considerations of population density that are not reflected in GDP measures. A combined replacement ratio (CRR) is suggested for developed countries combining the impact of the fertility rate and immigration rate. A CRR above 2 implies continued population growth. The current UK CRR of 2.48 is higher than needed for pension reasons, and it is suggested that it exceeds the welfare maximizing level.
This paper is based on a talk given at the World Demographic Association, St Galen University, Switzerland, on 7 September 2007.
One contribution of 14 to a Theme Issue ‘The impact of population growth on tomorrow's world’.