Humanity is likely below replacement-level fertility as of 2026, according to economists Jesus Fernandez-Villaverde and Patrick Norrick — a threshold the authors describe as unprecedented, noting that global fertility has never before fallen below replacement, not during wars and not during pandemics. In a new paper on global demographics, the two economists examine both the drivers and the economic consequences of the worldwide decline in birth rates.

High-income countries have lived below that line for decades — Japan's fertility has sat under replacement since the mid-1970s, and South Korea's rate fell to a record-low 0.72 children per woman in 2023 — but the surprise, they report, lies in where the decline is now concentrated: in low- and middle-income countries, and among poorer and less educated women. Fitting a single-factor model to fertility data from 236 countries since 1950, the authors find that the common global component of fertility peaked in 1978. What pushes fertility downward today, they write, are country-specific trends — 219 of which are negative, and not one of which is leveling off.

None of the commonly cited mechanisms can account for this pattern, the authors state. Their conjecture instead points to modernity itself, which "makes a third child expensive and childlessness cheap." Because children come in integers, they note, it takes very little to move a cohort's fertility rate from 1.8 to 1.3 — and nothing in an economy pushes fertility back to 2.1, roughly the level at which a population sustains itself from one generation to the next in the absence of migration. The paper closes with the main economic consequences of the shift, in particular slow growth. The arithmetic behind that concern is already visible in the countries furthest along: in Japan, nearly one in three residents is now 65 or older, and the population has been shrinking since around 2011. For the world as a whole, the United Nations' World Population Prospects projects population to peak in the mid-2080s at around 10.3 billion before declining.

Commenting on the research at Marginal Revolution, the post's author writes that the finding that "The estimated common factor peaks in 1978 and has been declining since" brings to mind birth control, albeit with lags. The post adds that the actual availability of birth control, all economic and social constraints considered, is a lot more fraught and difficult than some of the more superficial accounts might indicate.

The post, "The Economics of a Shrinking World," was published by Marginal Revolution on August 14, 2026 (source).