Submitted Manuscript: Confidential Is Low Fertility Really a Problem? Population Aging, Dependency, and Consumption*

4List of members of the National Transfer Accounts (NTA) Network who are authors and their institutions is provided in acknowledgements. Abstract: Longer lives and fertility far below the replacement level of 2.1 births per woman are leading to rapid population aging in many countries. Many observers are concerned that aging will adversely affect public finances and standards of living. Analysis of newly available National Transfer Accounts data for 40 countries shows that fertility well above replacement would typically be most beneficial for government budgets. However, fertility near replacement would be most beneficial for standards of living when the analysis includes the effects of age structure on families as well as governments. And fertility below replacement would maximize per capita consumption when the cost of providing capital for a growing labor force is taken into account. While low fertility will indeed challenge government programs and very low fertility undermines living standards, we find that moderately low fertility and population decline favor the broader material standard of living. One Sentence Summary: Low fertility will indeed challenge government programs in most countries, but viewed more broadly economic concerns about low fertility and population decline appear exaggerated. Main Text: Economic behavior, abilities, and needs vary strongly over the human life cycle. During childhood and old age, we consume more than we produce through our labor. The gap is * This manuscript has been accepted for publication in Science. This version has not undergone final editing. Please refer to the complete version of record a