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Chicago Fed Letter
The world’s population
by Jack L. Hervey

In October 1999, the world’s population nudged past the six billion
mark, according to United Nations
(UN) estimates.1 As this publication
goes to press less than two years later,
an additional 160 million plus individuals have been added to the tally—
a number that is roughly equivalent
to the current combined populations
of France, Spain, and the UK. Even
more striking is the fact that it took
less than 40 years for the world’s population to double from three billion
people in 1960. Can we expect the
population to continue to grow at
this pace? And, what are the implications of current and projected population growth for the world economy
and the economies of individual countries and regions?
In this Chicago Fed Letter, I present
an overview of a selection of developments in the world’s population
growth, with particular emphasis on
the post-1950 period. Second, I outline a set of economic issues (by no
means all) associated with demographic change that are facing a number
of the major regional/national economies. Finally, I suggest several economic issues likely to arise as a result
of population changes as we look forward. I hope to shed some light on the
great diversity in the world’s demographics and the dangers of viewing
the dynamics of population change
in one nation or region in isolation
from other nations or regions. This
is an area of study that not many
economists have explored.2 Perhaps
more should.

World population quadruples
in one century
Demographers generally agree that
the world’s population first reached
the one billion mark less than 200
years ago—in the early 1800s. The
next billion came relatively quickly
by historical standards, accumulating
in a little over one century—UN demographers estimate that the world’s
population reached two billion in the
late 1920s. Since then the “miracle”
of compounding (facilitated by advances in health care, gains in life
expectancy, and markedly higher
economic output and income in major portions of the world) has had a
conspicuous impact on the world’s
population. From the late 1920s it
took only another approximately 33
years for the world’s population to
reach three billion in 1960. Then, in
less than 40 years—1960 to 1999—
the world’s population is estimated
to have doubled to six billion people.
Within that span of time the surge in
population may be characterized by
two periods of exceptional growth—
one in terms of growth rate and one
in terms of absolute numbers.
The first of these exceptional periods
occurred between the years 1961 and
1974, when the world’s population
growth rate averaged an unprecedented 2% per year. The net addition to
the world population during that span
is estimated at 930 million individuals;
in perspective, this is a number that
approaches the current aggregate population of the third through seventh
most populous nations in the world—
the U.S., Indonesia, Brazil, Russia,
and Pakistan.
The second period of phenomenal
growth occurred a little later as the
rate of growth began to moderate—
1981 through 1994—a period during

1. World population, net additions
millions of people
Estimated: 1950 to 2000
Forecast: 2001 to 2050









Source: United Nations.

which the incremental increase in population peaked and averaged nearly
83 million people annually (figure 1).
Again, in perspective this annual increase was equivalent in size to the
current population of Germany.
Population growth rates have slowed
progressively during the past two decades to a rate of around 1.2% per
year currently. And, the annual net
additions have moderated somewhat
to around 77 million. Still, gains of
this magnitude are equivalent to
adding the combined population of
Ireland, Italy, and the Netherlands to
the world total each year. Given the
size of the population base in place,
even progressively reduced rates
of increase will result in substantial
numerical additions to the world’s
population and the demands on its
resources for many years to come.
This is reflected in UN forecasts, which
show the world’s population increasing another three billion—approaching nine billion—by 2050 (a good
portion of that total has already been
born). Thereafter, according to the
UN’s current best guess, continued
although marginal annual increases
will occur until the world total stabilizes at a little over 10 billion people
around the year 2200.3

One might expect that the allocation
of the world’s resources in order to
support a 43% increase (3.3 billion
people) in population during the next
50 years could pose a formidable
challenge. However, during the past
50 years the world’s economies have
absorbed an 88% increase (3.5 billion
people) in population and at the same
time have managed to generate an
increase in annual real incomes of
around 3.8%, on average (World Trade
Organization estimates). So, what’s
the problem? As it has been during
the past 50 years, the “devil is in the
details.” During the late 1990s and
in the early years of this decade the
world’s populations have been approaching a watershed that potentially has significant implications for the
demographic distribution across nations and the consequent economic
conditions of those nations. The three
plus billion people expected to accumulate during the next 50 years will
face a very different demographic/
economic environment from that of
the last half of the twentieth century.
What are some of those differences?
Increase in dependent populations
An aging population
In the U.S., discussion of an aging
population tends to focus on the structure and funding of intergenerational income transfers through the social
security system, whereby a larger proportion of the population ultimately
will be drawing benefits that are partly financed by a relatively smaller proportion of the population. While this
demographic and economic environment may constitute a formidable
challenge for U.S. policymakers, they
will not have to deal with the rather
difficult implications of a declining population (declining because of lower
birth rates and, eventually, a relatively smaller population in the productive
work force). An older and declining
population is an environment set to
face a number of the world’s economies in fairly short order. Indeed, several Western and Central European
countries, as well as Japan and South
Korea (even China by 2050) are
crossing or soon will cross the

divide; thereafter they
will experience not only
a relative increase in
their dependent aging
population but the
compounding effect
of a declining overall

2. Change in world population
percent share of 50 year change

Share of change between 1950 and 2000e
Share of change between 2000 and 2050f



For example, the pop15
ulation of Western
Europe in 2015 is
expected to be little
changed from that in
2000. Within Europe’s
aggregate population
Amer. Amer. Europe Europe Japan N.I.A.* China
of 388 million, the UN’s
*Newly industrializing Asia.
current forecast preNotes: e indicates estimate, and f indicates forecast. Sel. Afr. indicates selected
countries in Africa.
dicts that by 2015 a five
Source: United Nations.
million person aggregate decline in Austria,
Germany, Greece, Italy,
As challenging as these changes in
Spain, Sweden, and Switzerland will
population composition may be, arbe just offset by increases in the othguably, most of these countries are
er 12 major countries in this groupcomparatively well off economically.
ing. However, by 2050, the population
A more difficult challenge might apin these 17 countries is expected to
pear to be facing many of the low and
have declined by 38 million people,
lower-middle income nations of the
a 10% reduction relative to the year
“third world”—nations that, during
2000 (figure 2). This absolute decline
the period 2000 to 2050, are expectin population will occur as the impact
ed to contribute between 60% and
of declining fertility rates (number
80% of the more than three billion
of children per woman of childbearnet addition to world population.
ing age), currently below replacement
rates throughout virtually all of
Gains in the young and
Europe, eventually takes hold and
the old population
turns population growth negative.
Third-world countries currently acThese below-replacement fertility
count for only about one-third of the
rates are expected to more dramatiworld’s real economic output but are
cally affect several of the middlehome to nearly three-quarters of the
income nations in Central and Eastworld’s population (figure 3). Howern Europe. The Czech Republic,
ever, by 2050, according to current
Hungary, Poland, and Russia, in the
forecasts, these countries are expectaggregate, are expected to lose neared to contain four-fifths of the world’s
ly 14 million people between 2000
population. Age dependency in these
and 2015, and an additional 37 milnations will remain tipped toward
lion by 2050. Should declines of this
the young, but they also will face inmagnitude occur, they would consticreasing pressure from an aging poptute a 29% drop in population beulation—China in particular.
tween 2000 and 2050.
China deserves a special note with
On the other side of the globe, Japan’s
regard to the aging population
population is expected to increase
growth discussion. It is somewhat of
marginally between 2000 and 2015
an anomaly in that it appears to be
and then, by the year 2050, to drop to
going through a major transition with
109 million people from a population
regard to population growth that is
of 127 million in the year 2000, an
unusual for a country firmly planted
overall decline of 15%.
in the “lower-middle-income” class

of countries. During the period 1950
to 2000, China’s population more
than doubled to just under 1.3
billion people.
In response to the magnitude of the
nation’s population and its continued
rapid increase during the second half
of the century, the Chinese government instituted a policy in the early
1970s that encouraged couples to start
families later and to have fewer children (the “later-longer-fewer” policy).
Then in 1979 the government implemented a more specific restrictive
population policy, commonly know
as “one family, one child.” The results
of these policies were dramatic. It is
estimated that in the early 1970s
China’s fertility rate was greater than
5.0; by 1979 the rate had dropped to
less than 3.0. It is estimated to have
dropped to 2.2 by 1990 and to a less
than replacement rate of 1.8 in 1992,
where it has since remained. According to UN projections, China’s population will peak during the 2000–50
period and decline marginally between
2025 and 2050—from 1.47 billion to
1.46 billion. One of the results of this
shift in policy will be that China will
shift rather quickly from its late 1900s
youth-dependency status to an ageddependency status by 2050. As such,
the country will increasingly face the
economic pressures of relatively fewer
productive workers supporting a very
sizable older, dependent population.

In sum, while the industrial countries can expect to face a surge in
the relative size of older dependent
populations, the poorer third-world
countries can expect to face not only
an increase in older dependent populations but also, in many cases, a
continued large proportion of young
dependents. The disturbing point
of this is that the greatest increases
in dependent populations (whether
young or old) are likely to occur in
those economies that are least able
to support them.
Are these forecasts reasonable?
Current U.N. forecasts indicate that
by 2025 the world’s population will
likely approach eight billion. And,
while demographers expect that population growth rates will continue to
slow, eventually reaching a steady state
replacement rate, U.N. medium estimates for the world’s total population indicate that it will continue to
increase to around nine billion by the
year 2050. Eventually it is expected
to stabilize at a little over ten billion
around the year 2200. As with any forecast, the assumptions underlying it
are critical. Key assumptions include
expected changes in fertility rates
(number of children per woman of
childbearing age), life expectancy,
impact of diseases such as HIV/AIDS,
and trends toward urbanization.
Where do we go
from here?

3. GNP and population shares by region
percent of world total
GNP share in 1999
Population share 2000e
Population share 2050f





EU-15 Europe



N.I.A.* China




*Newly industrializing Asia.
Notes: e indicates estimate, and f indicates forecast. Sel. Afr. indicates selected
countries in Africa.
Source: United Nations and World Bank.

As noted earlier, the
population challenges facing the U.S.
pale in comparison
to those facing many
other regions of the
world, be they industrial or developing.
Western and Central
Europe face not only
an aging population,
but also the compounding influence
of a declining population. What are the
implications of a

proportionately older yet smaller population in a Europe in the throes of
economic, social, and possibly political integration? This is a population
that may drop from about 450 million
in 2000 to about 400 million in 2050.
(If Russia were included in this total,
the decline would be from nearly 600
million to a little over 500 million.)
What form of economic pressures would
such a decline place on European unification and on its ability to compete
economically and politically in the
world arena? Japan, with an estimated
15% decline in its population over the
next 50 years, potentially faces similar
political/economic issues.
Probably most disconcerting is the increase in dependent populations facing the poorest countries of the world,
in particular, the bulk of Africa and
nonindustrial Asia. The bulk of the
world’s three billion population increase will accumulate in these regions.
In addition, the proportion of dependent population (age 15 and under
and age 65 and over) in these regions
is expected to increase substantially,
a development that will hinder their
ability to increase incomes above mere
subsistence levels. What does this imply for economic and political stability
in these regions?

Michael H. Moskow, President; William C. Hunter,
Senior Vice President and Director of Research; Douglas
Evanoff, Vice President, financial studies; Charles
Evans, Vice President, macroeconomic policy research;
Daniel Sullivan, Vice President, microeconomic policy
research; William Testa, Vice President, regional
programs and Economics Editor; Helen O’D. Koshy,
Editor; Kathryn Moran, Associate Editor.
Chicago Fed Letter is published monthly by the
Research Department of the Federal Reserve
Bank of Chicago. The views expressed are the
authors’ and are not necessarily those of the
Federal Reserve Bank of Chicago or the Federal
Reserve System. Articles may be reprinted if the
source is credited and the Research Department is
provided with copies of the reprints.
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ISSN 0895-0164

Economics, as a profession, has not
paid a lot of attention to the impact
of compositional change in populations. In recent years the aging of the
U.S. population has begun to garner
attention with the realization that a
large new dependent population
would soon begin to draw increasingly on the nation’s productive resources.
What does this development mean
for the nation’s economic expansion
overall? How does this aging of the
population affect different industrial/
services sectors and geographical regions of the national economy? What
is the impact of an aging and/or declining population on the political/
economic desirability of promoting
immigration? For example, would
the promotion of immigration be
desirable (and more politically acceptable) from the perspective of highincome countries in order to fill the
gap in the younger/productive age

groups? However, doing so may pull
the “best” of the younger/productive
populations from third-world countries that are also facing an aging
population—compounding their already difficult conditions. These are
knotty issues, and will become increasingly so as the first half of this
century plays out.
This article draws extensively on the
following sources: The World Bank,
2001, World Development Report 2000/
2001, Washington, DC; The World Trade
Organization Secretariat, 2001, World
Trade Developments, Annual Report, 2001;
United Nations Secretariat, Population
Division, Department of Economic and
Social Affairs, 1999, The World at Six
Billion, ESA/P/WP. 154, New York, NY,
October 12; U.S. Bureau of the Census,
1999, World Population Profile: 1998, U.S.
Government Printing Office, Washington, DC, report, No. WP/98; U.S.
Bureau of the Census web site: http://

A notable exception is Professor Gary S.
Becker, who has long included population issues in his work (academic as well
as popular). On the popular press side,
see for example, Gary S. Becker, 2001,
“How rich nations can defuse the population bomb,” Business Week, May 28, p. 28.
A critical assumption of this forecast is
that the fertility rates in all major areas
of the world hold at the population replacement level from about the year 2050
onward. The UN study notes that the forecast is highly sensitivity to the fertility rate
assumption. For example, it points out
that a fertility rate of plus or minus onehalf child from the replacement rate (about
2.1 children per woman of childbearing
age) would result in a world population
in the year 2150 ranging from 3.2 billion
(about one-third the medium forecast)
to 24.8 billion (about two and one half
times the medium forecast).

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