Externality of Childcare

The cost for childcare has skyrocketed in the developed world. In the US, the average is ~$300k. But by my calculations, if you live in one of the coastal cities and live in generally upper middle class neighborhoods that cost will be close to the 800k mark. The cost is exacerbated by the general trend that the majority of millennials move away from home so the cost of childcare cannot be mitigated by grandparents. And grandparents are working later into their lives such that children are being born while grandparents are still holding full time jobs out of necessity.

Humans, being mostly rational decision makers, are significantly reducing the will to have children. Taking a look at the fertility rate by country, the entirety of the developed world falls below the replacement rate of 2.1. Particularly the wealthy East Asian countries (Japan, South Korea, Singapore, Taiwan) are well below the 1.5 mark.

Meanwhile, countries with lower GDP per capita are still experiencing population growth. The next chapter of global economic shift will be determined by the political decisions made by the wealthy nations.

One possible outcome is that wealthy countries experiencing labor shortage will welcome the population from lower wealth countries, replacing the population decline through liberal immigration policies.

Another possible outcome is that the technology (mainly AI) will advance quickly enough that labor shortage will be resolved by AI, and wealth will increasingly flow towards wealthy countries that created and own equity in those technologies.

Last possible outcome is that the wealthy countries adopt a policy of economic imperialism and structure the immigration policy to be restrictive and use their leverage to import cheap labor and products from poor countries.