The Demographic Transition Model (DTM) is a framework used to understand how population structures shift as societies undergo modernization and economic development. It describes a predictable sequence of changes in birth and death rates tied to industrialization, urbanization, and public health improvements. While the DTM traditionally ended at Stage 4, resulting in stable or near-zero population growth, the model has been expanded. Stage 5 recognizes that birth rates in highly developed nations have continued to decline below replacement levels, leading to a natural decrease in the total population.
Context: What is the Demographic Transition Model?
The DTM outlines the progression of a country’s population dynamics through a series of stages, moving from a pre-industrial state (Stage 1) to a fully industrialized state. Stage 2 sees a dramatic drop in the death rate due to advancements in medicine and sanitation, leading to rapid population increase. In Stage 3, birth rates begin to fall, often associated with greater female education, urbanization, and the reduced necessity for large families. By Stage 4, both birth and death rates are low, and population growth stabilizes at a low or zero rate. The original model assumed that birth rates would eventually level off, maintaining a replacement equilibrium.
Defining the Characteristics of Stage 5
The definitive characteristic of a Stage 5 country is a negative rate of natural increase, meaning the crude death rate exceeds the crude birth rate. This demographic shift is driven by the Total Fertility Rate (TFR) falling substantially below the replacement level of 2.1 children per woman. This replacement level accounts for slight imbalances in the sex ratio at birth and childhood mortality. In Stage 5 nations, the TFR often drops significantly lower, sometimes approaching 1.2 or less, indicating that each successive generation is considerably smaller than the one before it.
This low fertility rate creates an inverted population pyramid, where older citizens heavily outweigh younger citizens. Although overall health improvements keep age-specific death rates low, the crude death rate—the total number of deaths per thousand people—begins to rise slightly. This increase is a mathematical inevitability because the population consists of a much larger percentage of elderly people, who are statistically more likely to pass away. The combination of very low birth rates and a rising crude death rate results in a natural decrease, leading to a shrinking total population size.
Countries Currently Identified in Stage 5
A growing number of highly developed nations are considered to be in Stage 5, although the classification remains fluid and subject to debate among demographers. Japan is widely cited as the clearest example, demonstrating a deeply entrenched pattern of low fertility and a rapidly aging population structure. South Korea currently holds one of the world’s lowest fertility rates, hovering around 0.7, signaling a rapid future population contraction.
Numerous European countries exhibit the defining features of Stage 5, including Italy, Germany, and Spain. These nations have sustained Total Fertility Rates well below the replacement level, with Italy and Spain seeing rates around 1.2 to 1.3 children per woman. Countries in Eastern Europe, such as Ukraine, Croatia, and Estonia, also fall into this group due to low birth rates and emigration.
It is important to note that while these countries experience a natural decrease in population, some, like Germany, have maintained or slightly increased their overall population size through positive net migration. This highlights a complication in the DTM, as the model focuses only on natural increase and does not account for the mitigating effect of international immigration.
Economic and Social Implications of Negative Growth
Sustained negative population growth fundamentally reconfigures a country’s economic and social landscape, presenting significant challenges for public policy. The most immediate consequence is a rapid increase in the old-age dependency ratio, where a smaller working-age population must support a larger number of retirees. This dynamic places substantial strain on pay-as-you-go social security and pension systems, which rely on current workers to fund retiree benefits. Healthcare systems face similar pressure, as the elderly population requires more specialized medical services, increasing public spending.
The shrinking labor force leads to a contraction in economic activity and potential output, challenging long-term economic growth rates. Fewer workers are available to fill jobs, which can lead to labor shortages and potentially slow down innovation. Governments often attempt to address these issues by incentivizing higher birth rates through subsidies and extended parental leave, though these policies have had limited success. Another common strategy involves promoting skilled immigration to offset the decline in the working-age population.