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An Aging Europe

Wonder How You Manage to Make Ends Meet

Researchers at RAND Europe, an independently chartered European affiliate of the RAND Corporation with offices in Cambridge and Brussels, have been assessing which policies could prevent or mitigate the adverse consequences of falling birth rates and population aging across Europe. The policy debate has focused on promoting immigration, encouraging more childbearing, raising the retirement age, and encouraging more women to join the workforce.

So far, the researchers have reached these conclusions:

Immigration is not a feasible way to reverse population aging.
National policies can slow fertility declines under the right circumstances.
No single policy intervention will necessarily slow fertility declines.
Assisted reproductive technologies might help, depending on behavioral responses.
What works in one country might not work in another.
Population policies take effect slowly and so are often politically unattractive.

Allowing large numbers of working-age immigrants to enter European Union countries is not a feasible solution, because the sheer numbers of immigrants needed to offset population aging in Europe would be unacceptable in the current political climate. Immigration could nonetheless be a tool for slowing, as opposed to preventing, population aging.

Government policies can work. France, which was the first European nation to experience a decline in its fertility rate and which has had an aggressive set of pronatalist policies in place for decades, now has one of the highest fertility rates in Europe.

Countries have made progress by pursuing multiple policies. France offers generous child-care subsidies and rewards families for having at least three children. Sweden offers flexible work schedules, quality child care, and extensive parental leave. Policies that remove workplace and career impediments to childrearing are key. European countries that have made it easier to have and to raise children tend to have higher fertility rates than those that have not.

Another approach would be for governments to promote assisted reproductive technologies, such as in vitro fertilization. Although this approach could be cost-effective relative to other measures, the benefit could be wiped out if the technologies encourage couples to delay starting families, because older women find it harder to conceive, either naturally or with assistance.

What works depends on the political, economic, and social context in each country. In Poland and the former East Germany, the transition to a free market economy triggered fertility declines by reducing the incentives for childbearing, whereas the French have long been concerned that declining fertility poses a threat to their economy.

Policies to increase fertility take at least a generation to expand the labor pool, so politicians tend to focus on mitigating the short-term effects of population aging. One policy for doing so is to expand participation in the workforce, either by promoting longer working lives or by encouraging new entrants, such as women, to join the workforce. Related to this are policies that seek to enhance the productivity of older workers. square