Ageing populations spur costly baby-boosting policies to protect growth

As birth rates slide across many developed economies, governments are increasingly treating babies as an economic issue as much as a social one. A shrinking workforce and rising old-age dependency ratio leave fewer taxpayers supporting more retirees, placing growing pressure on public spending through pensions, healthcare and social care. In response, countries including South Korea, Hungary and Singapore have experimented with policies ranging from cash incentives and tax breaks to subsidised childcare, fertility treatment and housing support. Yet, despite billions spent, boosting fertility has proved elusive, suggesting that demographic change may be one of the toughest market failures for policymakers to correct.

What one country's experiment says about attempts to boost birth rates - BBC News

1. Explain what is meant by the dependency ratio and one reason why a rising dependency ratio may be a problem for an economy.

2. Using a Production Possibility Frontier (PPF) diagram, analyse the impact of a falling birth rate on an economy.

3. Evaluate the benefits of policies designed to increase fertility rates. Refer to examples from the article.