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Shrinking Populations Boost Productivity, Nobel Winner's Study Finds
A new study by Nobel winner Daron Acemoglu and colleagues finds that declining birth rates raise GDP per worker by 26.8% per percentage-point drop, fully offsetting population decline.
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The prevailing worry about declining birth rates may be misplaced. A new study by four economists, including 2024 Nobel laureate Daron Acemoglu, finds that aging and shrinking populations have historically raised output per worker and left aggregate GDP broadly unchanged.
The paper, distributed by the National Bureau of Economic Research, challenges the assumption that lower birth rates slow growth and innovation. The authors – Acemoglu, David Autor, Keelan Beirne and Andrew Scott – argue that workers and companies turn to technology to compensate for a smaller labor force. That response raises productivity enough to offset the drag from population decline.
“Our findings challenge the prevailing pessimism: lower birth rates, and the aging and shrinking populations they have produced, have raised rather than lowered GDP per ‘worker,’” the authors write. The gain “has been large enough to fully offset the negative effect of population decline, leaving aggregate GDP broadly unaffected.”
Birth rates have fallen across every continent over the past 70 years. Globally, the rate dropped from 3.78 per 100 people in 1950 to 1.71 last year. Each percentage-point decline led to a 26.8% increase in GDP per worker, the study found.