A declining population creates two major problems for economic management. The first problem is that a declining population is also an aging population — and in every society I can think of we depend on younger people to support older people. … The other problem is subtler but also serious. To maintain full employment, a society must keep overall spending high enough to keep up with the economy’s productive capacity. You might think that a shrinking population, which reduces capacity, would make this task easier. But a falling population — especially a falling working-age population — tends to reduce some important kinds of spending, especially investment spending. After all, if … Continue reading Population Drop (Paul Krugman)