All the rich countries on this map are dying, meaning that in these countries the number of babies born per woman, the fertility rate, is now below the replacement level of 2.1. Therefore, the population of the rich world will start shrinking soon, dragging down these economies, and threatening their pension systems.
But, some countries are in way more trouble than others. Take for example these countries in East Asia and Southern Europe. Despite having tried various policies to increase fertility, their fertility rates are now getting closer and closer to 1, very far below the replacement rate of 2.1. On the other hand, some countries, like the US and France, have actually been able to bring their fertility rates back up, close to the replacement level.
So, does that mean that the rich world can be saved?
To answer that question, I’ve been diving deep into the latest research by social scientists about (1) why rich countries are dying, (2) why some rich countries are dying so much faster than others, and, finally, how some rich countries have been able to stabilize fertility or even turn it around.
And, to really go the extra mile, I’ve even been doing some practical research about what motivates parents to have 1 or more children
and… yeah phew … let’s just say that while I didn’t sleep much, I learned a lot.
First of all, about
1 Why Rich Countries Have Fewer Babies
Because the evidence is really clear on this. As you can see here, if we compare the fertility of some of the richest countries in the world, to some of the poorest, the trend is clear. Richer countries have fewer babies. Similarly, if we look at the fertility of rich countries over time, we can clearly see that it has dropped dramatically as these countries got richer.
Although…. there is one exception, after the second world war, economies like that of the United States saw an economic boom that was actually combined with a fertility boom. But, this proved to be only temporary, as after the 1950s, fertility continued to slide as countries got richer, only to stabilize around after the 1980s.
So, what can explain these trends. Why do countries have fewer babies as they get richer? But, not during the baby-boom?
Well, while there are of course many theories, I could find just one theory that has really stood the test of time: the quantity quality-trade-off that was introduced by Nobel prize winner Gary Becker.
According to this theory, parents care about three things. First, they actually like having multiple children. This is quantity. Second, they want to give their children a good life, quality. And, finally, they do want to have some time and money left for themselves.
But, as you can imagine, since time and money are limited, these three things need to be balanced. And while it sounds contradictory, this theory can actually explain why in rich countries, parents have far fewer children even though they have much more money and typically also more time.
To see why, imagine that there are two economies.
The first is a poor economy where couples typically work on their own farm. In this poor economy, there are no good schools. So, if a parent wants to give their child the best quality of life that they can, they simply need to teach them how to work on a farm. And while every newborn baby requires an initial investment in the form of food and care, they can soon earn that back as they work on the farm to increase production or help in the house. Even better, as their parents get too old to work, children will take care of them in their old age.
So, in this economy, giving kids a good quality life is relatively easy and cheap. And, as they get older, children will actually start contributing to a parent’s time and income. Therefore, in this economy parents, on average, choose to have a lot of children.
Okay, now, imagine that this country gets rich. Thanks to all sorts of new household appliances freeing up time and people earning more money, you might initially expect that parents can now afford to have more children. However, given that children are now expected to go to primary school, secondary school, and then to university, they can no longer do as much housework or contribute to the family income. Therefore, when taking into account that children contribute far less to family work, and are no longer the parents pension plan, we can see that giving a child a good quality life in a rich society is actually much more expensive, and so parents naturally choose to have less of them.
Or, in the words of Becker’s theory, parents choose to have a lower quantity of children in rich societies because, even though they now have more income and time, the relative cost of raising quality children has gone up faster.
However, as you might have noticed, this theory does not explain the baby-boom, a time of rapid economic growth and increasing fertility.
<clip the baby boom>
So, to explain the baby boom, social scientists had to modify Becker’s framework to take into account that men and women are not equal when it comes to who likely spends most of their valuable time raising children, especially not in the 1950s.
You see, in those days, not only did women earn far less than men, they also only had access to certain jobs, such as those in administration or care sectors. So, a popular explanation for the baby boom is that as the second world war ended, there was a sudden influx of women, who previously worked in the factories, into the female job market. This meant that relative wages for younger women went down drastically compared to those of men, meaning that it became a far more logical choice for young women to stop working early to start a family.
Taking into account the position of women could also explain why the baby boom ended, as the influx of women from World War 2 factories stopped and the trend of female empowerment continued. Similarly it could explain why for a long time, countries with higher fertility were also the ones were fewer women worked.
And yeah, actually, I had a look at my own family history, and a version of the quantity quality trade-off theory that takes into account whether women work, can indeed explain most of it.
As the theory predicts, my grandfather, who was born on a farm in the relatively poor Dutch countryside of the 1940s, was part of a large family. Then, as the Dutch economy grew, my grandfather, who was a mason, wanted to give his children the opportunity to go to get an advanced education, meaning that he could have less of them. But, because his wife was a fulltime mom, they could still raise an impressive four children.
However, in the next generation fertility dropped once more, as I am one of two children. Which makes sense, given that both my parents kept working as teachers, while still giving me the support I needed to go to university and even pursue an advanced education in the form of a PhD.
So, to me, the version of Becker’s quantity-quality trade-off that takes into account how many women work, is not just ivory tower nonsense, it is a really useful tool to understand what is driving fertility.
However, while this modified theory can still explain why poor countries produce many more babies today, it cannot explain
2 Why Some Rich Countries Are Dying Much Faster
After all, if we review the evidence today, we can see that, among the rich countries, actually the ultra-low fertility countries are not the richest, and also, they are the ones where women typically work less.
So, does that mean that everything I just told you about what drives fertility in the rich world is no longer applicable?
No. But, it does mean that there is a new reality today that we need to understand to modify the quantity-quality trade-off. You see, according to Harvard professor Claudia Goldin, the old way of thinking about women that stop working when they get children is no longer realistic.
In the modern world most men and women want to combine a family with a fulfilling career. And, a recent paper by professor Doepke from the London School of economics and his co-authors makes the case that the ultra low fertility countries are typically the ones that make it really difficult for women to combine a family with a career.
In these countries, women typically want fewer children than their male partners because it affect their lives way more than that of their partners. This disagreement is really important since the same research indicates that if one partner wants more children, while the other doesn’t, a couple typically doesn’t get another child.
Therefore it makes sense that, to raise fertility, a country especially has to look at the partner which on average wants fewer children, which are most often women.
So, how exactly do the ultra-low fertility countries in Asia and Southern Europe make it so difficult for women to combine a career with having a big family?
Well, I have selected the three most important categories from professor Doepkes paper along with the evidence to show for which country they matter the most.
The first distinction is about differences in social policies between these countries.
Now, social policies can include lot’s of stuff, ranging from tax incentives to generous time off from work for new parents. However, the most important policy by far seems to be about whether or not childcare is cheaply and widely available.
I just emphasized availability because I’ve experienced myself that, while child care here in Belgium is relatively cheap, it is quite difficult to actually secure a spot for your children, largely due to a shortage of staff. And, given that the Netherlands has similar issues, I think it’s clear that providing good childcare means that countries need to combine subsidizing costs for parents with making it actually attractive to work in the childcare sector, which costs a lot of money.
Indeed, figure 20 in the paper by presented by prof Doepke clearly shows that there is a positive relationship between state spending on early childhood education such as child care facilities one the one hand and fertility on the other, with higher fertility countries like France and the Nordics spending more on making childcare available and affordable than low fertility countries like Japan and Italy.
And, because we were lucky enough to secure a spot, I have now seen that childcare makes a huge difference. If there was no child care, or if it was so expensive that we couldn’t afford it, we would definitely not consider having a second child. Because, yeah, both me and my wife are completely willing to spend a lot of time and money on children, because it’s just amazing and incredibly rewarding. But, yeah, neither of us wants to give up working completely.
And, as this research has shown, we are far from alone in this. However, one strange country is the United States where childcare is notoriously expensive. So, how can the USA then still have a relatively high fertility?
Well, that brings us to social norms, which much like, social policies sounds rather vague. But, research highlights three social norms as specifically important. The first is the norm about how involved men are when it comes to housework and childcare. As you can see here in this graph, almost all low fertility countries score very low on this metric. On the other hand, in countries like the United States, fathers help out way more. This potentially offsets the effect of expensive child care in the United States, as sharing the burden with fathers means women don’t have to stop completely give up on their career.
Another important social norm, which can explain why a lot of Korean parents only have one child, is that having children is very time-consuming if there is an extremely competitive educational system for which kids need a lot of home schooling.
Finally, in many East Asian countries like China there are strong social norms that women are supposed to take care of their children, discouraging the use of childcare, even if it is available.
The good news for Asian countries is that this problem could just solve itself in time. You see, many of them grew extremely quickly, and so it makes sense that social norms need to catch up with that reality.
The final category of differences between countries is Labor market problems, specifically high unemployment and job insecurity and this can help explain for a large part why fertility is so low in Southern Europe.
Now, this one seems a bit weird at first, since in poor countries there might also be high unemployment and job insecurity. To make sense of how job insecurity decreases fertility researchers increasingly make a distinction between parents with and without and advanced education. For those without much of an education and an unsure future in the job market, kids are in many cases just too expensive to raise in these relatively rich countries. This could explain why you have a high number of childless women in countries like Spain.
However, for the increasing number of parents with an advanced education, the calculation is completely different. For them, what matters is trying to have a career, as opposed to a job. Now, if the job market is not secure, this means that they are much more likely to postpone having children until they have secured a career.
Of course, on the surface, the outcome is the same, fewer children.
However, this distinction really matters for policy makers because it means that to increase fertility in a country with a lot of relatively poor parents, cash rewards, such as a 2700 Dollar bonus offered by the city of Shenzen in China, could actually do the trick. However, for wealthier parents, that want to have a career, a single lump sum is almost never big enough to make up for a lost career.
So, yeah, to conclude, a combination of lacking social policies, restrictive social norms, and insecure labor markets can explain why some rich countries are dying much faster.
Now, let’s use this knowledge to finally answer the question
3 How can the rich world be saved?
First, now that we have a deeper understanding about how the incentives for parents change as an economy becomes more advanced, I think it is really clear that rich countries simply cannot go back to ultra-high fertility seen in poor countries. The reason is that to get there, they would have to do some pretty regressive stuff like discouraging education, re-instating child-labor, or stripping the pension system, which is not very ethical, and also probably not politically feasible.
In a similar way, I don’t think it will be politically feasible for countries to go back to the male bread winner model. The model that powered the baby boom, where women stay home and therefore have more children. After all, women make up roughly 50% of the electorate, and given that they’ve had a taste of equal rights, they probably don’t want to go back. Similarly, I think a lot of men, myself included, be rather angry if governments seek to reduce the opportunities of our friends, wives, mothers and daughters to pursue their own careers.
So, then it seems to me that the most viable option for ultra-low fertility countries would be to embrace the new world in which both a man and woman aspire to combine a career with a family and make it as easy as possible for them to do so.
Given that there are large differences between countries, politicians from these countries need to make an evaluation about what specifically is holding parents back from having more children first. In many countries, the most straightforward fix would be to make childcare cheap and available. Then, countries with restrictive social norms need to encourage women to actually use these facilities. Finally, countries need reduce the cost of raising a child depending on their countries need. So, for example Asian countries could seek make their education system less competitive and their working culture less extreme. On the other hand, South European countries need to make their labor markets better.
And, yes, I know, that is far easier said than done.
In any case, I hope this video has made clear that, even for countries like the U.S. and France, there is still plenty of scope to make it easier for parents to combine work with family, and that if this is done comprehensively, the fertility rate should very well be able to come back up to or even slightly above the fertility level, just don’t expect miracles.
But, yeah, that is my take. What do you think? Can the rich world be saved? And, if so, will politicians in your country actually be competent enough to push through enough reforms to actually make it attractive for couples to have multiple children? Let me know in the comments.
Finally, of course there are a lot of theories about ultra-low fertility that I didn’t mention here because I didn’t find the evidence that supports them as convincing as for the theories I that I did talk about.