Would a decrease in fertility be a threat to living standards in Australia?

Abstract

Falling rates of fertility in many countries have led to concerns that low fertility is a threat to future living standards. In this article we report simulations of living standards for Australia that take into account the effect of demographic change. These simulations show that reduced fertility would actually increase living standards, albeit by a small amount. We also present projections of government social outlays. These projections suggest that reductions in fertility will have an insignificant or tiny tax-disincentive effect on GDP, thereby reinforcing our conclusion that reductions in fertility are not a threat to future living standards.