Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 391: From Demographic Dividend to Demographic Drag: Fertility Decline and Long-Run Economic Performance

Åsa Hansson and Kristoffer Lundberg
Additional contact information
Åsa Hansson: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Kristoffer Lundberg: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden

Abstract: Declining fertility is reshaping the demographic outlook of advanced economies, yet its long-run macroeconomic consequences remain poorly understood. Using a dynamic microsimulation model calibrated to the Swedish economy, this paper examines how alternative fertility and migration scenarios affect population dynamics, dependency ratios, GDP, GDP per capita, and economic growth between 2025 and 2100. We find that lower fertility initially raises GDP per capita through a temporary demographic dividend, but these gains are eventually offset by population ageing, a shrinking labor force, and slower economic growth. Under current fertility rates, GDP in 2100 is projected to be around 13 percent lower than under a stable demographic scenario, while lower fertility combined with lower migration reduces GDP to less than half that level. The findings highlight the importance of demographic structure for long-run economic prosperity and sustainable public finances.

Keywords: Fertility; demographic change; economic growth; welfare state; microsimulation

JEL-codes: E24; H55; J11

Language: English

25 pages, August 10, 2026

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