Eli5: What is a demographic collapse?
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When you look at a nation’s economy, its future economic output will either be greater or less than what the current economic output will be.
If it’s greater? Then everything is fine. Your nation can borrow against that future wealth and people are willing to invest in the future of your nation knowing it will be more prosperous in the future than it is now.
If it’s less? Then you’re in trouble. Suddenly it doesn’t make any sense to loan money to your nation or invest in its future. Without such loans and investment in the future, your nation rapidly collapses.
In a simplified sense, your nation’s economic output is the number people it has multiplied by their productivity.
In general, children have no productivity, young adults have some, mature adults have a great deal and the elderly have little. While productivity multipliers do rise over time due to technology and other factors, if your population starts to go into decline and those high productivity young/mature adults make up a smaller and smaller portion of the your population, you start flirting with the risk of a future less prosperous than the present – and that collapse I mentioned above.
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