Lost Generations? Fertility and Economic Growth in Europe

IMF Working Papers, March 21, 2025

Source details

The total fertility rate in Europe is 1.46, which is below the replacement rate of 2.1.
Falling fertility rates and the associated fast-aging population are identified as a significant drag on real GDP per capita growth.
Empirical results show that fertility has a significant positive effect on real GDP per capita growth in a sample of 42 European countries over the period 1960–2022.
The paper addresses endogeneity bias from reverse causality by implementing an instrumental variable approach.

Identification strategy: instrumental variable approach to address endogeneity caused by reverse causality.
Instrument used: exogenous variation in the comparative abortion index as an instrument for the total fertility rate.
Sample and period: 42 European countries, 1960–2022.

Below-replacement fertility coupled with rapid population aging has far-reaching social and economic consequences that can depress income per capita growth.
Quantitative estimation of fertility’s impact and testing for mitigating factors can inform appropriate policy responses to counteract the growth drag from low fertility and aging.

Title: Lost Generations? Fertility and Economic Growth in Europe
Author: Serhan Cevik
Publication type: IMF Working Papers (Working Paper No. 2025/055)
Date: March 21, 2025
Pages: 19
Volume: 2025
Issue: 055
DOI: https://doi.org/10.5089/9798229004732.001
Stock No: WPIEA2025055
ISBN: 9798229004732
ISSN: 1018-5941
Subjects: Aging, Gender, Gender diversity, Labor, Labor force, Labor force participation, Population and demographics
Keywords: Aging, copyright page, demographic trends, economic growth, economic growth in Europe, Europe, Fertility, fertility behavior, Gender diversity, Global, IMF working papers, Labor force, Labor force participation, views of the IMF

Source: IMF Working Paper — "Lost Generations? Fertility and Economic Growth in Europe" by Serhan Cevik, March 21, 2025.