The secular decline in birth rates across the globe over the past seven decades has slowed population growth, raised average ages, and reshaped labor markets and the macroeconomy. Contrary to the widespread expectation that these trends hamper economic growth, we find lower birth rates are associated with higher growth in GDP per working-age adult across countries and higher wage growth across US commuting zones, with no negative impact on aggregate GDP or earnings.

In the final section of the paper, we explore this question by studying changes in population resulting from WWII casualties. This approach allows us to distinguish civilian deaths, which primarily reduce population without changing the age structure, from military deaths, which both reduce population and raise the average age of the workforce. We show that total war deaths are associated with lower future GDP per worker, while military deaths predict higher GDP per worker, suggesting that it is the scarcity of younger workers that induces the positive productivity response.