Major global events shape demographics
Major events in global history, e.g. the Great Depression, have had an impact on demographics for generations. Normally demographics trend gradually, (which has been the case for most developed countries since WWII), but there is a decent chance we are in the middle of something that we’ll still notice in the population pyramid long term.
What we may see is a 'COVID bump', a generation notably smaller than the one before. Demographic history offers us clues as to the potential impact – take New Zealand’s fertility rate through the 1920s-40s. From 1921-1936 there was a general decline, but the impact was particularly pronounced in the early 1930s, as the impact of the Great Depression hit New Zealand.
The chart below, which shows the number of New Zealanders aged 20-24 is a treasure trove of information, highlighting the impact of war, disease and economic catastrophe on an age cohort. Initially, between 1936 and 1943 we have a significant dip in the number of New Zealanders in this age bracket, likely a function of fewer parents (due to casualties in WWI, as well as the Spanish Flu (1918-1920)) and the impact of WWII. What is interesting also is that the size of this cohort doesn’t rebound until the late 1950’s - it stays relatively flat.
Why could this be? Bearing in mind the parents of an early 1950’s person in this age bracket were mostly too young to go to war. The answer possibly lies in the Great Depression, and the associated collapse in birth rates noted in our first chart. What we see here is a generation that was virtually static in numbers from 1936-1956, as the total population of New Zealanders rose from 1.6m to 2.2m. It's not until the late 1950s, a generation born during the economic boom years post WWII, that we start seeing an increase.
To prospective parents today, the possibility of bringing kids into the world might seem like a frightening thought
The generation in its prime birthing years today, started work amid the Global Financial Crisis and, having experienced the impact of this on their career prospects, COVID-19 might be the straw that breaks the camel’s back.
Birth rates were already falling before COVID-19, with 2008 (just as the GFC struck) representing a high point for many countries. Older Millennials and Younger Generation X, having experienced the impact of the GFC on their incomes and wealth, had fewer children as a result. But the impact could be even greater for younger Millennials, (especially those born in the late 80s to early 90s). This cohort may already be more risk-averse as a result of the GFC but could become even more so amid COVID-19. The economic and psychological effects of COVID-19 could compound the scars of the GFC. Unemployment, falling wages and economic insecurity hardly induce libido, leading to a baby bust of epic proportions.
The magnitude of the decline is yet to be seen, but, according to the Brookings Institute, 2021 could see half a million fewer births in the United States, for context that equates to roughly 13% of the 3.8m births in 2018. A decline of this magnitude would be comparable to the impact of the Spanish flu in 1918-1920. This experience is likely to be replicated across the world in Singapore and Europe.
Surveys suggest a substantial percentage of young couples are likely to postpone or abandon having children. For example in Italy, 36.5% of women planning to have children in January 2020 had abandoned their plans by late-March. In developing nations, the impact may not be just confined to fewer births, with the impact on the economy and health systems leading to greater mortality among infants.
Whether Governments do anything to address this issue remains to be seen. Unlike during the Spanish Flu, many developed countries are struggling with aging populations, and can ill afford “unborn” children. An early policy move has come from the Singapore Government which will pay $3,000 to support parents who have children during the pandemic. Given what millennials have gone through in the first 10-12 years of their careers, however, an awful lot will be required to have any impact.
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