One of the most useful things I learned after taking macroeconomics in college was that I would never be an economist. That is not the case with MIT’s Daron Acemoglu – who was awarded the Nobel Prize in economics in 2024. He co-authored a just-released research paper, Baby Busts and Growth Booms: Demographic Change and the Macroeconomy, which found that “lower birth rates are associated with higher growth in GDP per working-age adult across countries and higher wage growth across US commuting zones, with no negative impact on aggregate GDP or earnings.”
That’s right. This study found that lower birth rates have no negative impact on aggregate GDP or earnings. None. Zero. Zip—although I’m not sure researchers commonly use that word.
After analyzing seven decades of data from virtually every nation on earth, the authors concluded:
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” (our shorthand for GDP per working-age adult) during these decades. The gain in GDP per worker has been large enough to fully offset the negative effect of population decline, leaving aggregate GDP broadly unaffected.
They found that “labor scarcity can raise output through induced automation.” Specifically, they found that scarcity of younger workers is a critical factor in the development of laborsaving technology. This is very positive news, although I doubt it will put a halt to the steady drumbeat of despair on the part of birth dearthers.
While celebrating this research, we must always consider the common good when considering impacts of economic growth. The late Sen. Robert F Kennedy put it best:
Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl…It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.
Managed intelligently, technology can play a powerful role in erasing concerns about lower birth rates. But it can’t absolve us of our civic responsibility to make sure that growth and technology serve people—not the other way around.
There is no labor-saving device available that will defend our values in a rapidly changing world. That’s up to us.
