Decoder: The economy of babies and borders

Depopulation threatens the long term economic health of developed nations. At some point they will have to open their borders.

A traditional brand of cookies for babies in Italy, called Plasmon, launched a shocking commercial.

In “Adamo, a true story from the future,” Adamo is the last baby born in Italy.

The 7-minute video is a sober reminder that Italy may or may not be a country for old men but surely has not many young people left, and the situation is likely to get worse in the future.

Italy was one of the first countries in the world to reach a very low fertility level with a total fertility rate of 1.19 births per woman in the mid-1990s. Consider that to maintain a country’s population level by births alone requires 2.1 births per woman.

Despite some swings, Italy’s rate remained at such a low level that recently the total number of deaths surpassed those of births.

This is a problem for many reasons. There are fewer workers for each pensioner, thus endangering the solvency of the system. Health spending per capita increases and there are fewer people who produce and innovate. All this means a higher level of public debt and lower economic growth. It means a world where things move at a slow pace and risk becoming unsustainable.

Policies to promote population growth

Public policies can help to promote baby making. France is often mentioned as an example of how government incentives can convince the public to have more offspring. But the effects of those policies is limited, experts say, and there is a much easier solution: Open the borders to immigration.

From overpopulation to underpopulation

Around 50 years ago, humanity went from fighting underpopulation to fearing overpopulation as progress in medicine drastically reduced child deaths and helped prolong lives. But so far, the worst forecasts have not materialized. Most experts now predict that the number of people will peak in a few years and start to decline.

Depending on who makes the calculation, the world’s population reached the threshold of eight billion in 2022 (the United Nations) or 2023 (the U.S. Census). But different estimates suggest that the total will keep growing for another 40 years.

Of course, no one is certain what will happen and as economists often say, forecasts are difficult especially when they are about the future.

Fewer young people means fewer people to support the elderly population who cannot support themselves. This could slow economic growth and lead to a lack of innovation and a higher public debt.

This may not be a problem for the whole world but it is the situation for all countries where fertility rates started to decline decades ago.

Low fertility rates like the Italian ones are becoming common. As of 2020, Spain had 1.23 children per woman. South Korea now holds the title of the lowest — 0.84 child for each woman. The United States has a higher level of fertility at 1.64, but still below the rate needed to assure a full population replacement.

Some regions are more fertile.

In Africa, fertility rates are on average much higher — Niger and Angola are among the highest with 6.73 and 5.76 children for each woman, respectively.

Most of the general forecasts that predict a worldwide fall in the total population rely on the hypothesis that Africa will also see, sooner or later, a decline in fertility rates.

“It’s really a bit of a combination of different factors that have switched a bit over time,” said Matthias Doepke, professor of economics at the London School of Economics. “The biggest fall in fertility happened already some time ago, from these large families 150 years ago to the two or three child norm that we’ve had for the last 40 years. But that’s a bit in the past.”

It is a different story, Doepke said, if you look more specifically at the fertility declines over the last 20 years or so.

“What has become a lot more central is this clash of aspirations, where people on the one hand, still want to have a family,” Doepke said. “But there’s a clash with another aspiration, which is that people want to have careers and fulfilled working lives.”

In particular, where men and women have equal aspirations, you will see lower fertility rates. “Just one generation ago, this was true very much for most men, that they wanted to have both careers and fulfilled family life,” Doepke said. “Recently, we have seen this major conversion in gender roles. We’re observing that these aspirations have converged. And this clash, in many other ways, expresses itself through low fertility rates”.

Of course, immigration alone cannot help creating a more equitable society where women can have both a fulfilling career and as many babies as they want.

The politics of immigration

A small Mediterranean outpost, the island of Lampedusa, has become one of the most popular landing spots for thousands of immigrants coming from Northern Africa. They risk their lives crossing the sea in poorly-maintained and overcrowded vessels, operated by questionable sailors, to escape wars and famine. They hope to get a better life in Europe.

So far this year over 127,000 people landed in Italy, more than twice the same period of 2022. More than 2,000 died in the same timeframe, according to the International Organization for Migration.

The public mostly does not want them; it sees potential for thieves and criminals and sees immigrants as competition for jobs rather than as a needed resource. Politicians often ride these feelings.

In September, after the number of illegal immigrants sharply increased in Italy, prompting France to tighten controls at its border, Italy’s right-wing prime minister, Giorgia Meloni, cried that she will not allow the country to become “Europe’s refugee camp”.

Meloni took power in 2022 promising to stop illegal immigration. The average number of births per woman in the European Union was 1.53 in 2021, according to the latest available data by Eurostat.

Immigrants continue to attempt dangerous crossings.

In Central and South America, meanwhile, authorities have tried to stop immigrants trying to cross the Darien Gap — 60 miles of mountains and swamps that are the only path connecting Central and South America — to reach the U.S. or Canada.

As it is the case in Lampedusa, Panama’s authorities often report fatalities in the crossing of the rain forests of the Darien Gap.

Despite the political opposition and the cost of these moves across continents, migration is increasing. In October, the Organisation for Economic Co-operation and Development (OECD) said that permanent migration to the 38 developed countries that comprises its membership, reached 6.1 million in 2022, a 26% increase from 2021 and a 14% increase over 2019.

These levels are a peak since at least 2015. The OECD also said that preliminary data predicts further increases in 2023 due to humanitarian crises and a general demand for workers.

There are also some countries that are trying to play the immigration card in a more positive way — attracting population and getting immediate economic benefits from the flow of migrants. On 2 November, the Reuters news wire service reported that the U.S. government would offer special financing to countries in the Western Hemisphere who agreed to host migrants to keep them from coming to the U.S.

This flow of people has supported Canada’s economic growth this year in a significant way.

Brazil is another example of a country that is using immigration to support its economy: Venezuelans who have been forbidden to enter other South American countries are welcomed there. Private firms offer them jobs.

Since 2018 the government has relocated 114,000 people, or around 2,000 each month.

It can be a political nightmare, but immigration can be a good thing, producing the future generations that some countries need.

SOME questions to consider:

1. How is a national economy affected by the number of babies born?
2. Why do nations avoid increasing immigration to solve economic problems?
3. Do you think a nation should encourage its citizens to have more babies? Why or why not?

A correspondent and editor in Europe and the United States for more than two decades, Tiziana Barghini has reported on Popes, mobsters and political crises. She led Reuters coverage of the euro crisis in southern Europe before moving to New York where she tackled the U.S. political economy including Detroit’s bankruptcy and the U.S. public pension system.

Read more News Decoder articles about immigration here: