One of the great emerging demography stories is the dramatic decline of fertility in Mexico, a country which was, until a few years ago, “one of the world’s great producers of people” at least according to the Economist.  The change in the country’s population structure has been dramatic:

“Fifty years ago Mexico was one of the world’s great producers of people. In the 1960s Mexican women had an average of seven children each; now they have only 2.4, and before 2020 the number is expected to drop below two. That would give Mexico a lower fertility rate than the United States, which is expected to maintain its current rate of about 2.1.” Just like the rest of the Western World (and China and Japan) Mexico has stopped having as many children and started living longer. The result has been a dramatic rise in the average age of Mexicans:

“In 1960 most Mexicans did not live beyond their 50s, and the average age was 17. Today the country has a wrinklier face. On average people live to 77, only a couple of years less than in the United States.” This means that over the last few decades, Mexico’s dependency ratio (the proportion of those in the retirement and school age groups to those working) has declined dramatically. Forty years ago there was one dependant for every worker, but now there are two workers for every dependent.  This is what economists refer to as the “demography dividend” – a phenomenon seen in China and the East Asian Tigers – a growing work force supporting a shrinking dependent population.  This change has come about mainly in the 1970s through a massive culture change:

“The nascent middle class noticed the opportunity cost of having large families, and as infant mortality dropped there was no longer a need to produce so many spares. The government made a U-turn: the right to a “free, responsible and informed” decision on how many children to have was enshrined in the constitution, and family-planning services were rolled out in spite of opposition from the Catholic Church. Abortion remains illegal in most of the country, but contraception is widely accepted. Four out of ten married women are sterilised.” Before that, the Mexican government had encouraged population growth as a way to ensure that it was not vulnerable to losing vast tracts of under-populated territories, as it had to the US in 1848. However, the demographic dividend requires investment in education to be adequately utilised, and it seems as is Mexico has not been making the necessary investment:

“In tests set by the OECD, nine out of ten South Korean teenagers meet basic requirements in maths but only half of Mexican ones do. Much poorer countries such as Azerbaijan and Thailand achieve better results on smaller budgets. Higher education also needs beefing up: only 22% of 25- to 34-year-olds in Mexico have a tertiary qualification, against 37% in Chile.” While the education budget has been increased to the OECD average of around 6% of GDP, the money is not entirely spent wisely:

“In primary schools 83% of non-capital expenditure goes on teachers’ pay, a bigger proportion than in any other OECD country. Teachers’ salaries are set and paid by their union, which publishes no accounts. Some “teachers” are union officials who do no teaching. Others are imaginary. A rare audit in 2008 found that one, in Chihuahua, was being paid 700,000 pesos (then $66,000) a month. There is now some testing of teachers, but apparently no consequences for the many who fail those tests. Elba Esther Gordillo, the union’s leader since 1988, confirmed in a recent interview that teaching positions could be bought for 50,000-100,000 pesos, a practice she said she found outrageous.” It just goes to show that throwing money at a problem doesn’t necessarily solve anything, a fact that a few governments around the world could do well to be aware of.  But determining how to get the best out of the education system isn’t the only problem facing the Mexican government (there are a whole heap of them listed in this interesting article by Scott Stewart).  The country currently has a population dividend, but soon it will be facing a rather large grey wave (not quite a “grey tsunami” like Japan but still a problem). The concern is that Mexico, like China, will get old before it gets rich:

“For now, the increase in the number of pensioners is more than compensated for by the fall in the birth rate, so the number of dependants is still falling. But starting in about a decade the dependency ratio will get steadily worse. The state will have to support a larger population of pensioners, just as families will have to help out ageing parents and grandparents.” Mexico’s welfare net is not as extensive as some other countries, but there will be an increased burden on the system.  A system that, like so many around the world, will have to learn to cope with fewer young people and more and more elderly.  The interesting dynamic is that the USA has drawn huge numbers of young Mexicans north in the past, it seems that that pool of labour and immigrants may be getting smaller.  How that will affect the US in the future will be interesting to see.