Tag Archives: birth rates

Fertility Levels and the Economy

Many countries are below replacement fertility levels due to shifting economic status of women and corresponding role shifts for men in taking responsibility for home and child care. Current research shows this is economically harmful but can be both inflationary and deflationary.

Many wealthy nations are considered to be “below replacement fertility” levels. Replacement level is attained when a country’s average birth rate is 2.1 children per woman, 1 per parent with 0.1 to account for infant and child mortality. One popular opinion on the cause of these low and decreased fertility levels is the economic status of women. Economists Bruce Sacerdote and James Feyrer examine three phases of women’s status and the fertility levels correlated with each phase. In the low-female-status phase, women have very limited if any economic role outside of the home. Fertility in this case is high. In the middle phase, women have roles and responsibilities outside the home yet they are still left with the burden of all home and child care. Fertility is lowest in countries such as Japan, Spain and Italy who find themselves in this phase. In a third phase, women still have opportunity to pursue roles outside the home AND their male counterparts pitch in with maintaining the home and childcare. Fertility is much higher here than in the middle phase.

Sacerdote and Feyrer examine other aspects which impact families’ fertility choices. It is interesting to think that in high-income countries, families make fertility decisions with peer effects in mind. Then in turn, societies with more children may develop more family-supporting infrastructure (e.g. tax incentives, increased maternity leave, and day care subsidies for families with children in France). The multiplier effect of social policy that this leads to is interesting. To think that social policy that supports families could influence one family that could influence many others through the peer effect social multiplier is an interesting concept.

Korea, Singapore & Hong Kong’s fertility levels have decreased from 3.5 to 6.0 children per woman in 1970 to below 1.5 children per woman in 2005. Specifically, Hong Kong’s fertility rate is the lowest in the world at 1.0 children per woman. I find this interesting because I would like to know more about how China’s one-child policy has affected this rate. The article says China’s fertility level is near replacement overall but I wonder how / how quickly this has come to be since the one-child policy was abolished in 2013.

Fertility rates can be difficult to predict for recent years and impossible to predict in real time. The data is difficult to collect and there are multiple ways to collect it. Japan in particular has had a difficult time measuring fertility rates but now that they have, they realize that in 2014, Japan’s birth rate shrunk by the highest amount on record. Their predicted fertility rates have been way off and overestimated consistently since 1965. Ana Swanson writes for the Washington Post:

“A working paper from Tokyo’s Waseda University… argues that the effects of an aging population on deflation are more complicated than typically thought – that aging is deflationary when caused by an increase in longevity but inflationary when caused by a decline in birth rate. Overall, Japan’s aging population generated deflation of 0.6 percentage points annually over the past 40 years, the authors say.”