With looming decline in GDP, US must allow more immigration

For the first time in history, the 21st century will see a decline in global population not because of wars or pandemics. The number of people is expected to peak at 9.7 billion in 2064, then shrink to 8.8 billion by 2100, because the fertility rate (the average number of children a woman delivers over her lifetime) is expected to fall below the number needed to maintain population levels.

Because fewer children will be born, there will be a narrower base of working-age adults ages 20 to 65 years old, and a much larger retirement-age population. One of the economic consequences of this inverted population pyramid is that major industrialized nations will struggle to sustain the necessary workforces to maintain GDP. Without strong economies, those nations will find it challenging to provide health and social systems that expanding elderly populations require. The way to address this problem is for nations to adopt two strategies: supporting women who wish or need to combine parenting and paid employment, and having more open immigration policies.

These are among the findings of a study published recently in The Lancet by the Institute for Health Metrics and Evaluation, part of the University of Washington’s School of Medicine.

Two countries facing this demographic dilemma, the United States and China, are competing to be the world’s leading economic superpower. Both face declining fertility rates. While the U.S. has historically welcomed immigrants and has built a strong sector of the economy on their labor, China has no such tradition, relying instead on internal rural-to-urban migration to power its economic growth.

For this reason, although China is predicted to surpass the U.S. as the world’s largest economy in 2035, the United States will regain the top spot toward the end of the century — but only if immigration continues to sustain its economy.

China’s shrinking workforce is a central concern for the communist party and the state council. The one-child policy was eliminated, but fertility rates after a two-year bump are back to extremely low levels. Migration remains an unlikely solution for China; despite reports that low-skilled labor immigration is also rising, there is no evidence of it happening on the scale needed to maintain China’s economic growth.

China is likely to pursue increasingly aggressive policies to encourage increases in fertility rates, including ideas such as taxing women who do not have two children. When social pressure and even fiscal instruments become intensified, they may become a real threat to women’s rights. In the U.S., where fertility rates are still much higher than in China, there is room to improve the support of women who wish to pursue careers and have children through maternity and paternity leave, subsidized childcare and protection of job status when taking time off to care for children.

In terms of immigration, the challenge for the United States is to return to a more open immigration system, one that will allow it to compete with the most open immigration regimes such as those pursued by Canada, New Zealand and Australia. As more and more high-income countries suffer the economic and fiscal consequences of inverted population pyramids, there is likely to be increasing competition to attract migrants.

If the U.S. wants to maintain its number-one GDP ranking, it must restore historical migration policies. And if China wants to continue challenging American economic power, it must allow more open immigration, a strategy for which it has shown no inclination. As economic power goes, so goes geopolitical power and diplomacy. Should China’s labor force decline, as it is projected to do compared to that of the U.S., the potential for tension, even conflict, in an already fractious relationship, will increase.

Source: thehill.com
Published: 12 August 2020

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