The higher fertility rates in emerging countries will contribute to larger workforces with more potential output, while developed countries with sub-replacement fertility rates, such as the United States, will have smaller workforces. The decrease in tax revenue from the shortage of workers could mean less care for the elderly or correspondingly higher tax rates in order to maintain social welfare programs.
In the U.S., for example, this demographic trend has contributed to the dire future of the Medicare system. Since its incipience in 1965, the number of tax-paying workers per beneficiary has declined from 4.6 to 3.1 in 2015. The Medicare Payment Advisory Commission expects that number to decrease to 2.3 taxpayers per beneficiary by 2030. According to this advisory commission, “fewer resources will be available to invest in growing the economic output of the future.”
