Why One of the Causes of Falling Birthrates May Be Prosperity

Interesting and I think good analysis:

…People in rich countries have fewer children

There are many factors that can contribute to lower fertility rates. China and India, for example, both had decades-long government programs designed to lower their birthrates. And experts have suggested that many other aspects of modern life — birth control, shifting marital patterns, increased career and education opportunities for women, and perhaps even smartphones — could also play a role.

But the statistics are very clear. As economies get richer, children get rarer. Today, nearly all developed countries have fertility rates between 1.2 and 1.8 births per woman, significantly below the “replacement level” of 2.1 that allows populations to remain stable over time.

The social and economic changes of the last 50 years mean that many people now have more choices, and the ability to freely make them. In the past, laws that banned contraception and abortion and limited women’s ability to own property often caused families — and women in particular — to have more children than they wanted.

But that is not the whole story. Survey data shows that around the world, people consistently have fewer children than they say they would like to have. Gallup opinion polling has found that Americans’ ideal number of children per family has averaged about 2.5 since the late 1970s, even as the actual fertility rate has fallen much lower. Financial concerns are the most commonly cited reason for this gap.

What’s going on here? It may seem paradoxical that people would claim to be less able to afford children as their countries become richer. But as economies grow, several things happen.

Wages rise, which means that the opportunity cost of unpaid activities like parenting also goes up. The more parents can earn in paid work, the more of a sacrifice it becomes to spend their time on unpaid parenting instead.

Parenting also becomes more labor-intensive, because developed countries tend to put a greater premium on education and human capital, which require more effort and attention from parents. In most developed countries, parents now spend roughly twice as much time on child care as they did in the 1960s.

There are also big changes that take place as developed countries build a social safety net. In less-developed economies, children often work for family farms and small businesses from a young age, then support parents in their later years. But as countries get richer, they tend to tax working adults to pay for retirees’ benefits. That means today’s children grow up to support everyone’s parents, not just their own, but individual parents still bear the vast majority of the costs of raising children. That puts parents at a financial disadvantage in comparison to their peers who have fewer or no children.

The end result: As countries get richer, parenting shifts from being a way to save for retirement and be better off financially to being an obstacle to financial well-being.

Even the most generous welfare states do very little to defray those costs. Nordic countries, which are famed for their subsidized child care and maternity leave, for example, actually have some of the highest parenting costs in Europe, once parents’ time and out-of-pocket costs are taken into account.

Of course, becoming a parent is not strictly an economic decision. Children bring joy and meaning, and the loving bonds between a parent and a child, or between siblings, are among the most rewarding human relationships. But even the most loving and dedicated parents are still subject to economic reality.

Even if they have one child or two, they may decide not to have more, because they love the ones they already have and want to give them the best lives possible. That might explain why more than three-fifths of the decline in birthrates comes from people having fewer children, not from people opting to remain childless, a recent working paper found.

The problem or the cause?

For those who believe women should return to traditional gender roles, falling fertility has become a convenient way to argue that women’s participation in the work force is a threat to the survival of humanity. But the reality, unsurprisingly, is more complex.

Claudia Goldin, a Harvard economist who won a Nobel Prize in 2023 for her work on women in the work force, found in a recent working paper that birthrates have fallen especially steeply in countries like Japan, South Korea and Italy, where economic growth rapidly sent more women into the workplace, but gender attitudes failed to adjust to that shift. In those countries, women began working more hours outside the home, but men did not do more housework or child care, leaving women with a heavy double burden.

In that situation, Dr. Goldin writes, “women must reduce something,” and that something turned out to be children. In South Korea, for example, fertility rates plummeted from an average of six children per woman in the late 1950s to just 0.75 in 2024 — the lowest in the world….

Source: Why One of the Causes of Falling Birthrates May Be Prosperity