Population decline in a technological age

The effects of falling birth rates in developed countries since the early 21st century, when birth rates dipped below replacement rates of 2.1 per couple, are felt mostly as spatial and economic, rather than purely demographic in nature. As a population begins to reduce, its people, capital and services do not decline evenly. Declining populations tend to concentrate into a smaller number of major urban centres while their rural and peripheral areas experience faster depopulation. This pattern reflects the early stages of industrialisation when economic opportunity drew people from the countryside into towns. While history appears to be repeating itself, the factors governing this new industrial age are very different in nature.
In the modern era, artificial intelligence (AI) and automation are often presented as solutions to workforce decline. In some labour markets, and in the short term, these technologies may offset shortages and maintain or increase productivity, but technology alone cannot address the wider consequences of population decline. Urban concentration tends to reinforce lower birth rates, reduced consumer demand and place pressure on taxation systems as the working age population falls. We can already see these trends in countries such as Japan and China, where population decline and rapid urbanisation are occurring together. Over the next fifty years, the interaction between demographic change, technology and spatial concentration (the degree to which things like people, businesses, and activities cluster together in specific geographic areas, rather than being spread out evenly) is likely to shape societies more strongly than population size alone.
The effect of the Industrial Revolution
The industrial revolution caused industry to centre around lines of communication – roads and rivers – especially in places where they intersected. These areas already existed in many cases, such as market towns located on river intersections. Industry also required resources, including water and coal to power machinery. Areas that allowed transport of these resources and had a reliable water supply developed first. These locations already supported populations due to trade routes and access to water.
As mechanisation increased, productivity economies of scale became possible. Industrial output was no longer limited by the speed of human labour, which allowed capital to be used more efficiently than in rural production. Investment flowed towards towns connected by transport networks, reinforcing their advantage. Industry expanded demand for labour, which encouraged people into urban areas where work was available. Political stability and changes in law also accelerated industrialisation. The development of banking systems, contract law and property rights reduced investor risk. During the mid-19th century, the introduction of limited liability companies paved the way for investment with limited risk. This made investment more attractive and increased the flow of capital into new projects. This helped urbanisation.
Life in the countryside was no longer viable. As local markets declined, rural trades were unable to compete with mechanised production. Long-distance commuting was unheard of, so many people repeatedly packed up and moved. This was largely a movement of necessity, not choice. As people left, so the villages declined, and with them the rural economies. Then, the support services and non-industrial trades collapsed, making it inevitable that the people still there also had to move. At the same time, investment was happening not in rural areas, but in cities, to draw new residents.
The industrial revolution was driven by the interaction of resources, labour markets, capital, technology and supportive legal systems. Once advantages were established, industrial centres grew rapidly.
Twenty-first-century depopulation trends
Similar patterns are now emerging within modern countries. As populations diminish, rural decline accelerates as service deserts form. The number of schools in rural areas has already declined. Falling child numbers make small schools difficult to sustain, leading to closure or consolidation. Families may be forced to relocate to access education, which reinforces depopulation.
Over time, rural areas tend to become less suitable for families without enhanced state support. Populations become skewed towards older or childless adults or families willing to accept long travel distances. Similar pressures affect healthcare and other public services. In the UK, austerity measures during the 2010s affected rural services more heavily due to higher per capita costs and lower political priority. At the same time, urban areas continue to consolidate resources. Schools are built at larger scales to serve growing populations. Medical services merge into larger practices to reduce costs. While this improves efficiency, it also strengthens the advantage of large urban centres.
Over the past fifty years, super-centres have continued to grow. Cities such as Tokyo and Beijing have expanded, while surrounding rural areas have declined. Similar patterns exist in parts of western Europe and southern France. In Japan and China, entire villages have experienced severe depopulation. These trends show that urban concentration is structural rather than country-specific. In Europe, labour mobility has intensified this process, and while the removal of internal borders allowed young people to migrate towards economic centres, countries on the edge of the European Union have attempted to slow the decline through lower taxation and incentives, as seen in Romania. Falling tax receipts limit countries’ ability to sustain services, which only accelerates rural decline, while at the same time, more investment flows towards urban centres.
When rural services decline, push factors increase, and employment and infrastructure in cities act as strong pull factors. This feedback loop deepens regional imbalances. Urbanisation also contributes to lower birth rates, because urban living requires smaller and more expensive housing per square metre and higher living costs. This leads to delayed family formation as young adults struggle with housing costs. As households form later and financial pressure increases, family size falls. These conditions reinforce demographic decline.
The role of Artificial Intelligence
Artificial intelligence is developing rapidly and has increased productivity in knowledge-based industries. AI may offset some labour shortages in sectors where tasks can be automated, but its effects are uneven and limited by its nature.
AI is capital-intensive and depends on large-scale infrastructure, and the advanced computing it relies on requires energy, reliable networks and specialised skills. Just as with industrialisation, this new infrastructure tends to concentrate where systems already exist, which lowers cost and risk. In addition, AI platforms are controlled by a small number of multinational companies, and while they operate globally, decision-making and investment are centralised. This centralisation favours established urban centres rather than rural areas.
Remote working allows some flexibility, but most AI activity remains organised around central hubs. Firms benefit from clustering skills oversight and innovation networks. AI employment therefore, reinforces urban concentration rather than dispersing it. Again, capital flows first to urban centres where AI investment is most efficient. Labour follows capital, leading to younger workers moving towards cities where the opportunities and training are concentrated. AI therefore, accelerates existing urbanisation trends.
Examining the current situation in Japan and China shows how demographic decline, urbanisation and technology interact. Despite having radically different political systems, both show similar results over time. In Japan, post-war development concentrated around cities, particularly Tokyo. Building land in Japan is at a premium due to Japan being mountainous. Housing is small, expensive, and limited by land availability. As the population ages in Japan, the demand for land has increased, raising costs further. With these rising costs, younger generations must live with their parents longer. Couples date later, and coupled with high housing costs, the formation of family units is delayed further. This directly impacts birth rates negatively. China followed a different path, but the outcomes have been similar. With rapid industrialisation in the 1970s. The cities pulled in the population from the surrounding rural areas. Along with a burgeoning population, the Chinese government enacted a one-child policy. This led to couples favouring boys due to cultural differences. This has led to an unnatural imbalance in the sexes. While the one-child policy has been dropped, the formation of family units has drastically reduced. This, coupled with limited floor space for housing, has led to birth rates still being below 2.1 in China. China uses its own technology infrastructure, but again, this is located in urban areas. China is also pursuing its own AI structures. These factors accelerate rural decline. While China and Japan have radically different political systems ,they are both experiencing similar outcomes of increased urbanisation and technological advancement while suffering with low birth rates well under the 2.1 self-sustaining rate that is required.
The effects of population decline
Population decline among the working-age population will lead to other economic effects. Businesses will face lower demand in consumer markets initially, followed by business-to-business markets. Financial markets will be affected by lower rates on investments, and the pension markets will have lower input while still having to cope with an ageing population. This will lead to a reduction in tax receipts, meaning governments will have to cut back on services or redirect money to other priorities such as health care. While AI can offset labour shortages, it can not create consumer demand. Also, AI is owned by a few multinational corporations; their profits will be taxed overseas, leading to a deep decline in tax receipts. This will further lower the ability of a government to meet it’s population’s needs.
In conclusion, population decline is currently happening in most developed countries. Over the next 20 to 50 years, most countries will experience an inversion of their ageing population and working-age population. While AI can soften the effects in the labour market and increase productivity, it cannot prevent the concentration of people, capital and fewer opportunities in rural areas. These challenges must be overcome by each country’s government managing change rather than relying on market forces and AI alone.