Latin America is about to reap a generation of demographic dividend thanks to plunging fertility rates, which in Brazil, Chile and Mexico are below the replacement rate of 2.1. From 2000 to 2020, the percentage of working age Latin Americans (16-65) is projected to rise from 42 to 53 percent. That will deliver an economic boost akin to dropping unemployment from 15 to 4 percent.
When societies have fewer children, households can rise above the economic burden of feeding, clothing and educating the young. Having fewer children frees time up for mothers to pursue employment or start a business. Discretionary spending soars in such a household and a demographic dividend is born. It lasts for 30-40 years, until those fewer children must support their aging parents.
From 2010 to 2020, the number of working age Latin Americans will grow by 41 million people, while the number of children under 15 will actually shrink by about 11 million. There will be less demand for schools and more demand for discretionary spending items like computers, cars and travel. Car ownership in Latin America, which was enjoyed by only 3 percent of Latin households in 1990 will penetrate 25 percent of households by 2020. An era of consumption is about to begin.
CHANGING HOUSEHOLD STRUCTURE
As Latin American society grows up, it is also breaking many of its stereotypical molds. Young Latin Americans, especially college graduates, are waiting longer to marry often till their early 30s. Households of young adults living alone, or with other unmarried friends, is one of the fastest growing segments in modern Latin America. An even faster growing segment is "empty nesters," older adults who have shed their home of independence-seeking children. Instead of moving in with children and grandchildren, the better off classes of elderly Latin Americans are increasingly choosing to move into a smaller dwelling on their own.
Other social taboos are rocking Latin American society and reshaping the household landscape. In the 1970s, only 20-25 percent of children were birthed by unmarried mothers. Today, the figure is closer to 60 percent, higher than any region in the world. In the more socially conservative societies of Chile, Peru and Colombia, the figure is more than 70 percent, according to a groundbreaking study by the Social Trends Institute. While in post-modern societies like Sweden or Canada...