Population, Prophets, Pensions, and Politics

Abstract

As immigrant populations in Western welfare states grow at a faster rate than the native populations, whose birthrates have declined dramatically in recent years, Europe’s tradition of democracy and tolerance is threatened. The reasons for the birthrate decline and the resultant aging of the native population are many and complex, but one important contributing factor is the pay-as-you-go pension system, which reduces people’s immediate dependence on children. Moreover, the payroll and social security taxes that support the welfare state reduce the earnings capacity of men and women of the traditional age for having children, thus pushing down the birthrate. It is time to consider whether modern Europe’s small-size families and high pensions are sustainable.

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