How the Birth-Death Ratio Reveals the True State of the Job Market

By Bhupendra Thapa

"Behind every workforce trend lies a demographic story, and the birth-death ratio helps us read the next chapter of economic development."

Population is more than a measure of how many people live in a country. It also influences how many people may enter the labour market, how many workers support retirees and how businesses plan for future demand. When birth rates decline and life expectancy increases, the effects gradually extend beyond families to employment, productivity, public spending and economic growth.

However, the relationship between population and employment is not straightforward. A country can experience falling birth rates while its workforce continues to grow for several years. Another country may have millions of working-age residents but still struggle with unemployment because its economy does not create enough suitable jobs.

Understanding these differences requires more than looking at birth and death figures. Fertility, age structure, migration, retirement patterns and labour-force participation all help explain how demographic change affects the job market.

The core numbers behind the demographic shift

The United Nations' World Population Prospects 2024 estimated global fertility at 2.25 births per woman, compared with 3.31 in 1990. More than half of countries and areas worldwide had fertility below the approximate replacement level of 2.1 births per woman. Replacement fertility is a long-term benchmark for maintaining population size without migration; it is not a threshold at which population decline begins immediately.

The decline in fertility is also reflected in the number of babies born worldwide. A major study published in The Lancet estimated that global live births increased from 92.7 million in 1950 to a peak of 142 million in 2016, before falling to 129 million in 2021. The same study estimated global fertility at 2.23 births per woman in 2021. These figures describe historical estimates rather than the number of births in 2025 or 2026.

These trends do not mean that the world's population is already shrinking everywhere. Population momentum, longer life expectancy and migration can sustain growth even when fertility falls below replacement level. The effect on the workforce also takes time because children born today generally will not enter full-time employment for many years.

Another important demographic milestone concerns the balance between older and younger people. The United Nations Population Fund reports that, in 2018, the number of people aged 65 and older worldwide exceeded the number of children under five for the first time. This comparison highlights population ageing, although it does not mean that older people outnumber all children.

Together, these figures show that the world's population structure is changing. The economic consequences will depend on how quickly the working-age population grows or declines and how effectively countries use the skills and abilities of their residents.

Understanding the dependency ratio and the role of employment

The dependency ratio is commonly used to describe the relationship between people outside the conventional working-age range and those within it. The overall dependency ratio generally compares children under 15 and adults aged 65 or older with people aged 15–64. The old-age dependency ratio focuses specifically on people aged 65 and older relative to the working-age population.

These measures help economists understand demographic pressures, but they do not directly show how many people are employed or financially dependent. Some working-age people are unemployed, studying or providing unpaid care. Others work beyond conventional retirement age and continue contributing to economic activity.

The OECD's Employment Outlook 2025 reported that its old-age dependency ratio increased from 19% in 1980 to 31% in 2023. It projects that the ratio will reach 52% by 2060. The OECD also projects that the population aged 20–64 will decline by 8% across its member countries by 2060, with a decline exceeding 30% in more than a quarter of member countries. These figures are projections, not guaranteed outcomes.

A rising old-age dependency ratio can create pressure on pension systems, healthcare services and public finances. When fewer people are in the conventional working-age population relative to the number of older people, governments may face greater difficulty financing public services without changes to taxes, spending, employment or productivity.

Nevertheless, the number of working-age people does not tell the whole story. Goldman Sachs Research reported in 2025 that the share of the population in employment had increased since 2000, despite declining working-age population shares in developed economies. Its analysis also found that dependency ratios in richer countries had fallen according to its measure, partly reflecting longer working lives.

This finding adds an important qualification to the demographic debate. The OECD's age-based projections and Goldman Sachs' employment-related analysis examine different measures. A country can experience population ageing while more people work later in life. Greater employment among older people may ease labour shortages and support economic activity, but it does not eliminate the costs of ageing or guarantee that every industry will have enough workers.

The lesson is that demographic pressure and labour-market performance are connected but distinct. Longer working lives, better health, migration and higher productivity can soften the economic effects of ageing. Their success, however, depends on working conditions, skills, public policy and the needs of individual industries.

Why regional demographic trends differ

The demographic transition is occurring at different speeds across the world. Several East Asian and European economies face persistently low fertility and ageing populations, while many African countries have younger populations and growing numbers of potential workers.

South Korea illustrates the challenge of very low fertility. According to official statistics, its total fertility rate increased from 0.72 in 2023 to 0.75 in 2024. Although this was an improvement, it remained far below the approximate replacement level of 2.1 births per woman.

A modest recovery in fertility does not immediately reverse the consequences of many years of low birth rates. Smaller younger generations can eventually mean fewer new entrants into the workforce, while a growing older population increases demand for healthcare and care services. Businesses may need to compete more intensely for employees, and governments may need to reconsider retirement systems and support for older residents.

Africa faces a different challenge. The United Nations Economic Commission for Africa projects that the continent's working-age population, defined as people aged 20–64, will increase from 883 million in 2024 to 1.6 billion by 2050. This would make Africa an increasingly important part of the world's potential labour supply.

However, a larger working-age population does not automatically create a demographic dividend. Countries need sufficient investment in education, vocational training, healthcare, transport, electricity and businesses that generate productive employment. Without these conditions, population growth can increase unemployment and underemployment rather than improve living standards.

The contrast between South Korea and Africa demonstrates why demographic change should not be described as a single global crisis. Some countries need to adapt to a shrinking supply of younger workers, while others must create enough jobs for rapidly expanding younger generations. Migration and international labour mobility may connect these different situations, but their outcomes depend on skills, policies and the willingness of workers and employers to participate.

What demographic change means for businesses and policymakers

For businesses, population ageing can affect recruitment, wages, customer demand and long-term investment. Employers in healthcare, manufacturing, construction and other essential industries may face difficulties filling vacancies as the available workforce changes. At the same time, companies in younger economies may have access to a growing pool of potential workers but still struggle to recruit people with the necessary skills.

Three developments deserve particular attention.

First, declining fertility reduces the potential number of future workers, but the effect unfolds gradually. Changes in births today influence the size of future school cohorts and, later, the number of people entering employment. This gives governments and businesses time to prepare, although it does not remove the challenge.

Second, longer working lives can help economies use experienced workers more effectively. Flexible working arrangements, lifelong learning and healthier workplaces may allow more people to remain employed as they age. However, extending working lives is not equally practical for everyone. People in physically demanding occupations or those with health limitations may have fewer opportunities to work longer.

Third, regional differences are changing where potential workers live. Countries with growing younger populations may become more important sources of labour, while ageing economies may seek skilled migrants or invest in technology that improves productivity. Businesses operating internationally will increasingly need to consider demographic trends alongside wages, skills and infrastructure.

Policymakers should avoid relying on one solution. Family-friendly policies may help people achieve their desired family size, but increasing births will not solve immediate labour shortages. Raising retirement ages may support employment among older people, but it must account for differences in health and working conditions. Migration can address some shortages, but successful integration requires suitable housing, training, recognition of qualifications and access to public services.

Investment in productivity is equally important. Better technology, worker training and improved management can enable businesses to produce more with available labour. In ageing economies, retaining experienced employees may be as important as recruiting new ones. In younger economies, the priority may be ensuring that education and skills development match the jobs being created.

The honest takeaway

Demographic change is a long-term economic challenge, but it does not determine economic decline by itself. OECD projections point to growing pressure on the working-age population in many advanced economies. South Korea's low fertility illustrates the difficulty of replenishing younger generations, while Africa's growing working-age population highlights the opportunity and responsibility of creating productive employment.

Goldman Sachs Research provides a useful counterpoint by showing that employment patterns and longer working lives can soften some effects of population ageing. Nevertheless, a higher employment share does not eliminate pension and healthcare pressures, and an expanding working-age population does not guarantee jobs or higher wages.

The most reliable assessment combines several measures. Fertility rates help explain future population change; birth and death counts show natural population growth; dependency ratios describe age structure; and employment rates indicate how effectively people participate in the labour market. The birth-death balance alone cannot reveal the true state of employment.

Author's concluding opinion

In my view, the real issue is not simply whether births are falling or deaths are increasing, but whether economies are preparing for the population changes already under way. Treating low fertility as an automatic sign of economic decline overlooks the contribution of older workers, migration and productivity growth. At the same time, assuming that longer working lives will solve every labour shortage ignores the limits imposed by health, occupation and working conditions. Countries with ageing populations should invest in skills, healthier workplaces, appropriate retirement systems and productivity-enhancing technology. Countries with younger populations should focus on education, infrastructure and decent employment so that demographic growth becomes an economic advantage. Ultimately, population statistics describe the challenge, but the quality of economic and social policy determines how well societies respond.

References

GBD 2021 Fertility and Forecasting Collaborators. (2024). Global fertility in 204 countries and territories, 1950–2021, with forecasts to 2100: A comprehensive demographic analysis for the Global Burden of Disease Study 2021. The Lancet, 403(10440), 2057–2099. https://doi.org/10.1016/S0140-6736(24)00550-6

Goldman Sachs Research. (2025, May 27). The path to 2075: The positive story of global aging. https://www.goldmansachs.com/insights/goldman-sachs-research/the-path-to-2075-the-positive-story-of-global-aging

Organisation for Economic Co-operation and Development. (2025). OECD Employment Outlook 2025: Can we get through the demographic crunch? OECD Publishing. https://doi.org/10.1787/194a947b-en

Statistics Korea. (2025). Preliminary results of birth and death statistics in 2024. https://sri.kostat.go.kr/boardDownload.es?bid=11773&list_no=436027&seq=2

United Nations Department of Economic and Social Affairs, Population Division. (2024). World Population Prospects 2024: Summary of results. https://www.un.org/development/desa/pd/world-population-prospects-2024

United Nations Economic Commission for Africa. (n.d.). As Africa's population crosses 1.5 billion, the demographic window is opening; getting the demographic dividend requires more time and stronger effort. https://www.uneca.org/stories/%28blog%29-as-africa%E2%80%99s-population-crosses-1.5-billion%2C-the-demographic-window-is-opening-getting

United Nations Population Fund. (n.d.). 8 trends for a world of 8 billion people. https://www.unfpa.org/8billion/8trends