What is the impact of childbirth on the economy?

The worsening of the fertility crisis has reshaped the economic landscape in the long term. The rapid decline in the population of major global economies has laid the foundation for significant changes in the next decade. The birth rate has long been a concern for economists. The decline in population may lead to labor shortages, inflation, drastic changes in consumer culture, and an excessive burden on government plans to cope with aging populations. There is also enormous potential and significant challenges in population growth.

Firstly, a recent study by the Organization for Economic Cooperation and Development predicts that a decline in birth rates will permanently change the population structure of the world's largest economy in the next decade. If the prediction is accurate, 2064 will be the first year in modern history in which the global mortality rate exceeds the birth rate. Many large economies have gone through this process, with the total fertility rate of 38 OECD member countries dropping from 3.3 children per woman in 1960 to 1.5 children per woman in 2022. This is far below the replacement level of 2.1 children per woman required to maintain population stability. This means that the labor force in many countries is rapidly decreasing. In the 1960s, there was one retiree for every six workers. Nowadays, this ratio is about 3:1. By 2035, it is expected that this ratio will reach 2:1.

Secondly, in the past decade, executives of American companies have raised the issue of labor shortages nearly 7000 times in financial report meetings. In the analysis, it is shown that a decrease in labor force may lead to labor shortages, which may increase employee bargaining power and raise wages, all of which ultimately lead to inflation. Immigration has helped alleviate the population problems of wealthy countries in history, but population decline has now become a global trend. This means that developed economies may find it difficult to import labor from these places through immigration or purchasing goods.

In addition, the rapid influx of population into key resources such as water, energy, and food supply chains has brought pressure. The acceleration of urbanization has brought enormous pressure to housing, transportation networks, and public services. As cities continue to expand to accommodate a growing population, unplanned urban expansion and inadequate infrastructure lead to traffic congestion, environmental degradation, and a decline in the quality of life for residents.

It can be seen that in Nigeria, the country's healthcare and education system is under tremendous pressure to meet the growing needs of young people. The high fertility rate has led to the rejuvenation of the Population Pyramid, which puts forward additional requirements for maternal and child health services. Obtaining high-quality education has become increasingly difficult, with overcrowded classrooms and limited resources, hindering educational outcomes and skill development.

However, Nigeria's young population structure has contributed to labor supply and shaped consumption patterns. The increasing income of young people has accelerated the demand for goods and services, creating opportunities for enterprise innovation and expanding market scope. This population driven consumption growth can stimulate the development of various industries, from retail and consumer goods to entertainment and digital services, thereby promoting economic activity and employment opportunities. If Nigeria's population advantage is effectively utilized, its global competitiveness can be enhanced. The young and skilled workforce has attracted foreign direct investment from multinational corporations, which hope to leverage Nigeria's market potential and workforce.

In summary, the debate over whether population growth or decline is a blessing or a curse highlights the urgent need for strategic intervention measures to effectively utilize the demographic dividend. If there is no intervention, the social security trust fund will run out in the future, meaning that only a portion of retirees' benefits can be paid, as the number of births in the United States decreases. Nigeria's rapid population growth provides abundant opportunities for economic vitality, innovation, and global competitiveness through its young population structure.