Where Health Is Wealth: At First Blush, Europe's Demographic Future Looks Bleak, with Low Birthrates and an Aging Population. but as Nicholas Eberstadt Explains, Europe Has a Trump Card That Can Help Solve Its Demographic Crisis-If Europe's Laws and Norms Can Change

By Eberstadt, Nicholas | The American (Washington, DC), May-June 2008 | Go to article overview

Where Health Is Wealth: At First Blush, Europe's Demographic Future Looks Bleak, with Low Birthrates and an Aging Population. but as Nicholas Eberstadt Explains, Europe Has a Trump Card That Can Help Solve Its Demographic Crisis-If Europe's Laws and Norms Can Change


Eberstadt, Nicholas, The American (Washington, DC)


All around affluent Western Europe--in leading journals and newspapers, organized conferences, national capitals, and parliamentary committees--people are talking about demography. As a general rule, whenever people are talking about demography, it is only because there is trouble in the air. So it is with Europe these days. As is widely recognized, and not just within the confines of the continent itself, Europe appears to be caught in a steadily tightening demographic vise.

According to projections by the U.S. Census Bureau, the United Nations Population Division, and even the European Union's own Eurostat, the region's total population is expected to remain virtually stagnant between now and 2030. At some point in the next few years, Western Europe is projected to make the fateful shift to a"net mortality society," at which point deaths will come to exceed births for the region as a whole on a regular basis; thereafter, only immigration can postpone the advent of indefinite population decline.

But this overall reckoning does not speak to important structural changes also underway. Western Europe's population of "economically active ages"--traditionally defined as ages 15 to 64--is set to peak just after 2010. It could decline by nearly 20 million (or by over 7 percent of the total European working-age population) between now and 2030, even with continuing immigration. At the same time, the region's elderly population is set to swell. By 2030, nearly 25 percent of Western Europe's population is projected to be 65 or older (compared with 17 percent in 2008).

There will of course be regional variations in the tempo of population aging: Ireland is expected to remain somewhat more youthful than Italy, for example. Nevertheless, by the year 2030 the median age for Western Europe as a whole is projected to be approaching 47 years-about a decade higher than America's median age today.

These impending population changes have immediate and significant implications for Western Europe's economic future. Among other things, demographic deceleration and the shift to zero population growth accentuate the "life cycle" aspects of earning, saving, and consuming in overall macroeconomic performance. Working-age people tend to earn more than they consume, while older people tend to "dis-save." But in the years ahead, there will be many more of these "dis-savers" in Europe, and rather fewer people in the traditional "net-producer" age groups.

Barring changes in labor-force participation, there are three main alternatives for achieving overall life-cycle balances between income and consumption in an essentially stationary population: reduced consumption (which translates either to diminished personal consumption or less public healthcare, pension support, and social services); reduced savings and investment, and thus slower growth; or reduced survival prospects for the elderly. This is hardly an attractive array of options!

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But there are additional options. While contemporary Western Europe faces many serious demographic constraints, it also enjoys some important demographic advantages. For all the population angst in Western Europe today, the region possesses a major, and economically portentous, demographic advantage that policymakers still seem to ignore. Europe's adults are blessed by high general levels of health and very low levels of mortality. They consequently exhibit great potential to remain productive at advanced ages--perhaps even more so than their American counterparts.

In 2003, life expectancy at birth for men in the United States was an estimated 74.7 years, while this figure was 76.0 years for the EU-15. Norway and Switzerland had male life expectancies of 77.0 and 77.9 years, respectively.

Differentials in life expectancies for women run similarly in Western Europe's favor. Female life expectancy at birth was 80. …

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