Has Demography Doomed the Euro?

This week's Economist has a "Free Exchange" blog lamenting the potentially disastrous impact of population aging on the eurozone:

The slow growth and strained government finances of recent years will soon be dramatically amplified by demography. And the member facing the most severe onslaught is not a small Mediterranean country but Germany, the euro area’s muscleman.

Germany is on the verge of depopulation, to be sure. That is especially a consequence, however, of reunification. The former East Germany, like virtually all of eastern Europe and Russia, has had very low levels of fertility for a long time. This is almost certainly a residual of the economic stagnation associated with communism. Southern Europe also has very low fertility levels, occasioned in my view by the continued schizophrenic view of women--it's OK for them to be educated and employed, but they really shouldn't try to combine work and family. "Society" prefers them to be home having kids, but the women themselves prefer to work, and the two aren't matching up very well. But look at the UK, France, and the Scandinavian countries. They have fertility levels very close to replacement and are not on the verge of depopulation. Of these, only France is in the eurozone. A paper just out in Demographic Research demonstrates that fertility has been rising in Denmark as both men and women stop postponing children and move closer to replacement level. The countries within the eurozone are demographically quite different from those European countries who are not in the euro.

The article does correctly point out that some of the problems seemingly attributed to an aging population are, as I noted recently, structural, rather than purely demographic:

The most obvious response to an ageing population is for older people to carry on working and for pensions to be paid later in their lives. Changes made in Italy in 2011, for example, yanked up the retirement age. This could potentially raise the labour supply sharply as more 50- and 60-somethings stay in the workforce. Similarly, in or out of the euro zone, Greece needs to tackle early retirement. Even with such reforms, however, the zone will struggle to grow at a reasonable rate in the next 15 years. That will make it tough to tackle the big private- as well as public-debt overhangs that afflict many of its member states, leaving them vulnerable to further setbacks.

The latter point, about public debt, is largely a consequence of governments not paying attention to demographers about the changes that needed to be made many years ago. Demographers at Germany's Max Planck Institute for Demographic Research in Rostock have for a long time been calling on the German Parliament to raise the age at retirement and, indeed, to restructure the labor force to increase productivity across the ages. Every delay in doing so has made it seem that a demographic disaster is inevitable when, in fact, it was legislative short-sightedness that has been the problem.