Some fertility and AI forecasts
The 2024 forecast is particularly pessimistic about China’s fertility prospects. Both projections produce very substantial global aging, a major global capital glut producing very low long-run real capital returns. The latest forecast entails 10% lower global GDP in 2100 and far higher payroll tax rates to fund old-age benefits. Most important, it entails a major […] The post Some fertility and…
The 2024 forecast paints a grim picture of China's fertility prospects. The projections suggest significant global aging, a massive capital surplus leading to low long-term capital returns. This scenario could result in a 10% decrease in global GDP by 2100, necessitating higher payroll taxes to support elderly benefits. Perhaps the most alarming aspect is the shift in economic power: by 2100, China's global GDP share would plummet from 25.6% to 14.9%, while the US share would increase from 11.2% to 14.4%.
The findings are contingent on various factors. If the US halted all future immigration, its 14.4% share would diminish to 9.2%. Similarly, if global fertility aligns with the UN's low variant, worldwide output would be one-third lower by 2100, not just one-tenth. The distribution of global output is also heavily influenced by the pace of AI development.
Rapid AI advancements, either four times faster than recent growth or ten times faster, could enhance demographic trends, solidifying long-term US economic dominance. A new NBER working paper by Seth G. Benzell, Laurence J. Kotlikoff, and Victor Yifan Ye explores these dynamics. Notably, the US's share of global GDP is already higher than it was in 1980.
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