A low fertility rate does not affect the economy today — it affects it on a delay, and the delay is what makes it dangerous. A baby born this year enters the workforce in about 20 years and retires in about 60. So a fall in births works its way up the age ladder like a gap moving through a queue:
The chapter states the consequences of that final stage precisely: “As more people grow older and retire, there are fewer younger workers available to work in farms, factories, and offices. This could potentially lead to a slow down in the economic growth of the country.” Alongside that, the government faces “challenges paying pensions and providing services because of fewer young taxpayers”, and healthcare systems come under pressure because older adults need more care.
The evidence is China. Its fertility rate fell from 7.5 in 1963 to 1 in 2025, and the results are now visible:
Population peaked at 1.43 billion in 2022
Projected 1.31 billion by 2050 → a fall of 0.12 billion = 120 million people, about 8 per cent
Share aged over 65: 14% (2023) → 26% (2050), nearly double
How countries respond, and how well it works. Japan has raised the retirement age and uses technology and automation to compensate for labour shortages, with large-scale community centres and robots and AI assistants to help care for older adults. China ended the One-Child Policy in 2015 and now allows up to three children. Yet the chapter’s verdict is sober: China’s “fertility rate still remains below replacement level, showing the policy’s lasting impact on society and the economy,” and “policies in many nations have attempted to revive the fertility rate but have not been very successful so far.”
Why it is so hard to undo: to raise the number of births you need women of child-bearing age, and a country with low fertility has already produced a small generation of them. Even if every one of those women decided to have three children, there would be fewer mothers than before. Falling fertility is easy to start and very slow to reverse — which is exactly why the chapter calls the demographic dividend a window.
It is worth adding the other side honestly. In the short run, fewer children per family means fewer dependants for each worker to support, so more income can be saved, invested and spent on educating each child well. A low fertility rate is a problem for the workforce only when the small cohorts finally reach working age — but by then it is far too late to change it.