The population problem in Singapore is also an economic problem

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Last week Singapore's government published a statistic that underscores a growing challenge in the country. The average number of children being born there has fallen to a record low. And, in fact, around the world, many governments are struggling with low fertility rates. Planet Money's Mary Childs explains why this population problem is also an economic problem.

MARY CHILDS, BYLINE: Singapore's updated fertility rate is a statistic that it's been watching closely for decades.

DONALD LOW: Essentially, the challenge is that birth rates have come down very significantly while life expectancies have increased very dramatically.

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CHILDS: This is economist Donald Low. He worked for the Singapore government for almost 15 years. And the economic worry for a government like Singapore's is something called an inverted pyramid - a population that has too many retired people at the top, not enough working-age people paying taxes, and even fewer babies being born to be future workers and taxpayers. For Singapore, Low says this is in part due to an overshoot. In the 1970s, Singapore's government was worried about the opposite problem.

LOW: At that time, the challenge, as in much of the developing world, was that we had a problem of reproducing too many children, and our economy, our resources, may not be able to keep up.

CHILDS: So Singapore had policies - disincentives - to discourage people from having kids. Subsequent children meant worse taxes, parental leave, hospital costs. But Singapore also started enjoying strong economic growth. And in general, with more economic development, women get better education and job opportunities. And in general, when women get more education, they tend to have fewer babies.

LOW: I mean, this is partly a happy problem. It's a consequence of success. With rapid economic development, birth rates were going to fall on their own. And so you pile on these disincentives, you're going to have an even larger fall in birth rates than you would already have.

CHILDS: Once Singapore realized its trajectory, it started offering incentives to encourage people to have kids - like better parental leave, tax benefits, government-subsidized child care, even what it calls a baby bonus scheme - handing new parents as much as $24,000 in cash and matching savings. And a lot of countries that are facing this same problem are doing similar, offering more and more generous programs for parents. But in Singapore, the fertility rate keeps falling.

LOW: I think government has more or less given up now. And it says, we will simply focus on maintaining the population. And since we can't do it through having citizens have enough children, we will just have to allow more immigration.

CHILDS: Immigration - if you need workers and there are people who want to come to your country and work, it makes sense. For Singapore, this has been effective. Its population would be declining were it not for immigration. And there is this other strategy that can help an economy adapt to a shrinking workforce.

LOW: The other solution that is constantly talked about is, of course, the use of automation, right? And here there is some glimmer of hope in the sense that at least we can adapt to aging populations.

CHILDS: If it can't cause more births, Singapore can focus on the things that it can control more easily, its own immigration policies and adding more robots. Mary Childs, NPR News.

(SOUNDBITE OF LOLA YOUNG SONG, "REVOLVE AROUND YOU") Transcript provided by NPR, Copyright NPR.