In poor countries lower fertility is usually good for the economy. But it can also increase inequality.
ECONOMIES benefit when people start having smaller families. As fertility falls, the share of working-age adults in the population creeps up, laying the foundation for the so-called “demographic dividend”. With fewer children, parents invest more in each child’s education, increasing human capital. People tend to save more for their retirment, so more money is available for investment. And women take paid jobs, boosting the size of the workforce. All this is good for economic growth and household income. A recent study estimated that a decrease of Nigeria’s fertility rate by one child per woman would boost GDP per head by 13% over 20 years. But not every consequence of lower fertility is peachy. A new study by researchers at the Harvard School of Public Health identifies another and surprising effect: higher inequality in the short term.
Source: The Economist, Aug 11, 2012.