Lhe European countries are almost all facing demographic aging and a decline in their working-age population (15 to 64 years). This fell by 2.5% in the euro zone and by 2% in France, between 2010 and 2023.
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The drop in the fertility rate, that is to say the number of children each woman has on average, will amplify this movement. In 2023, it was only 1.36 in Germany, 1.68 in France, 1.24 in Italy and 1.19 in Spain, whereas it should be slightly above 2 to ensure the replacement of generations.
We can therefore predict a drop of 17% in the working age population, between 2023 and 2050, in the euro zone, and of 7% in France. The situation is completely different in the United States, where this population has increased by 1% per year since 2018, with a recent acceleration due to immigration: 647,000 immigrants were registered in the United States in 2021, 1.9 million in 2022, and their number should reach 3 million in 2023, a year which also saw 878,000 naturalizations. In India, the working population has grown by 3% per year since 2018, which contributed almost half to the country’s economic growth over this period.
“Optimal population”
What strategy should we adopt in Europe in the face of this worrying demographic situation? A first possible strategy is that of… resignation. It corresponds to the theoretical analysis known as “optimal population”, according to which a country which will suffer a decline in its working age population must, as long as aging has not yet occurred, accumulate external assets, not in the form of public debt securities of other countries, but in that of productive assets – investments in businesses and infrastructure – of countries that will remain young.
This will allow the aging country to compensate or supplement with capital income, repatriated from the rest of the world, the drop in its domestic income, and thus not to suffer a decline in its per capita income, even though its per capita production backs up.
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This is, for example, the strategy followed by Japan. For ten years, the country has benefited from a current account surplus of 2.9% of its gross domestic product (GDP) on average. But this current surplus is only 15% due to its trade balance surplus; it results essentially from the surplus in the balance of capital income, thanks to a considerable level of net foreign assets: 3,460 billion dollars (3,235 billion euros), or 64% of the country’s GDP!
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