Tag: Fertility Rates

Originally published at Forbes.com on May 26, 2021.

Last Friday, the New York Times made a splash with its report, “Long Slide Looms for World Population, With Sweeping Ramifications,” laying out the consequences of persistently-low fertility rates all across the globe.

“The strain of longer lives and low fertility, leading to fewer workers and more retirees, threatens to upend how societies are organized — around the notion that a surplus of young people will drive economies and help pay for the old. It may also require a reconceptualization of family and nation. Imagine entire regions where everyone is 70 or older. Imagine governments laying out huge bonuses for immigrants and mothers with lots of children. Imagine a gig economy filled with grandparents and Super Bowl ads promoting procreation.”

This is not just a matter of those countries with historically low birth rates, like Japan or Italy: “Even in countries long associated with rapid growth, such as India and Mexico, birthrates are falling toward, or are already below, the replacement rate of 2.1 children per family.”

And the consequences are not merely a matter of closed maternity wards, kindergartens and schools converted to nursing homes, or universities competing for students instead of vice-versa. Instead, scholars and researchers are asking questions such as these:

• How will the need to provide financial support as well as medical and personal care to an increasing proportion of the population affect a country’s economy?
• How will these shifting needs, and the shrinking proportion of the population in the labor force, affect the country’s ability to function, purely from a labor market perspective?
• What less quantifiable impacts will a greying population have on a country’s vitality and prosperity?

Some of this is a simple matter of math. The World Bank provides old-age dependency ratio projections through the year 2050, based on consensus assumptions regarding future fertility and mortality rates. In 2010, the ratio for the US stood at about 20 oldsters (age 65 and above) per 100 working-age people (ages 15 to 64); in fact, this ratio had been more or less level throughout the 90s and aughts as well, but then it began to climb. In 2020, the ratio stood at 26. In 2038, it’s forecast to hit 35, at which point it more-or-less levels off again.

(To be sure, the standard population forecasts at the United Nations from which this data appears to be derived, are based on assumptions around fertility rates which may not, or may no longer, be reasonable, in particular for the United States, where the calculations, as of 2019, are based on a fertility rate of 1.78 children per women, projected to increase gradually, to 1.80 in 2030 and 1.82 beginning in 2065. The most recent actual data is a fertility rate of 1.64 for the year 2020 (that is, with only a small impact of Covid 19 and generally reflecting longer-term declines); while these low rates have been explained as only temporary and artificial due to a calculation method that uses old and no-longer-valid expectations of childbearing ages, recent calculations at Brookings project a longer-term TFR only recovering up to 1.77 children per woman, using “moderate” assumptions, but potentially declining to as low as 1.44 if using more conservative assumptions. For comparison, the UN forecasts that fertility rates for Germany will recover from 1.61 now to 1.71 in 2050, for Italy from 1.30 to 1.51, for Japan from 1.37 to 1.57, and for Korea from 1.08 to 1.44.)

Worry 1: finances

This math is daunting, to be sure. But in the year 2020, the old-age dependency ratio for Germany already stood at 33, almost as great as our projected “doom” scenario. And in Japan, that ratio already stood at 48. Both of these countries remain economic powerhouses, with reports on worries about the impact of needing to provide for the elderly in those countries always framed as a concern for the future. The balance of workers to the elderly in Germany has not affected the country’s debt-to-GDP ratio, which stands at 57%, And while Japan has a ratio of 238%, this has been a matter of deliberate fiscal policy rather than a crushing burden of caring for the elderly.

To what extent is Japan, right now, experiencing the ill effects of a population imbalance, in terms of its finances and its government’s ability to meet the needs of its people without destructively-high levels of government spending? Readers, each time I’ve tried to find the answer to this question, I’ve come up empty.

Worry 2: labor shortages

Germany, in 2015, publicly welcomed a mass migration of asylum-claimants with hopes that they would fill in forecast holes in the labor force, though optimistic reports at the time of highly-educated Syrians faded and Germany struggled to integrate its new residents with a forecast that even after five years in the country, migrants still had only a 1 in 2 chance of being employed.

Japan has had similar ongoing worries of labor shortages, with government attempts to find solutions in immigration, an increase in women’s labor force participation, and a change in its work culture. But, more crucially, Japan is playing a leading role in increasing automation/robotics to solve this problem, for example in the construction industry, as well as in eldercare.

And, indeed, however much immigration advocates use forecasts of future labor shortages as grounds for increasing legal immigration normalizing illegal immigration (e.g., Vox, in 2019: “The US economy needs more low-skilled immigrants”), at the same time, there is no shortage of predictions of worker displacement due to automation, such as this 2019 Brookings forecast that a quarter of U.S. workers could be displaced by automation. Some even believe that worker displacement will be so dramatic that it will warrant a Universal Basic Income to accommodate a significant portion of the population exiting the labor force without suffering in poverty.

What future we’re actually headed towards is unknown, but adds up to, at least, less cause to worry about shifts in the proportion of workers.

Worry 3: less-quantifiable changes in vitality and prosperity

What happens when a country shifts from young to old, and when its population declines in absolute terms?

This question is the hardest to answer.

One set of concerns is with absolute population decline. A columnist at The Japan Times, Hisakazu Kato, posed some hypotheses:

“First, the larger the population, the higher the chance that great innovators will emerge. This is called the ‘genius hypothesis,’ and since the innovation is the source of technological progress, a simple inference shows that economic growth will stagnate as the population declines.

“Second, a larger population increases the opportunity for intellectual interchange with diverse human resources, which in turn promotes technological progress . . . .

[Because of t]he aging of the population . . . society gradually loses the creativity and aggressiveness associated with younger people.”

But how can you quantify the number of people, or of young people specifically, needed to maximize innovation and creativity? Certainly at some point there are diminishing returns here.

The other half of that question, issues around the effect of a age shift in the population on the culture itself, is just as difficult to address, in part because those cultures which have had low birthrates for long enough to be far along this path are distinctive in other ways. Is it possible to identify elements of Japan’s cultural distinctiveness which are a result of its aging society, rather than being the cause of the low birth rate, or unrelated to it?

One piece to the puzzle is what’s called the “low-fertility trap hypothesis,” an idea put forth that suggests that countries which reach a particularly low level of fertility will be unable to return to “replacement fertility.” The key paper here, from 2007, asks the same question I’ve been asking: how can researchers justify assuming that every country will regain a higher fertility rate? The authors propose several reasons why fertility rates will continue to decline once a decline has begun. In the first place, generally speaking, people tend to have fewer children than they consider “ideal” but that ideal family size is driven by what they see around them, so that as each generation shrinks their expectations and their actual family size will continue to shrink. In addition, each generation boosts its material asperations, seeing a prior generation’s luxuries now as necessities and perceiving themselves as less well off and more reluctant to have children. What’s more, as fertility rates decline, generational inequity (e.g., government spending shifting to the elderly) increases and reduces fertility rates further.

To be clear, this is a hypothesis, and has neither been proven nor refuted. The cases of countries with “recovered fertility” are few and the “recovery” may be only temporary (e.g., Sweden) or due to migration from high-fertility countries (Germany).

But beyond that, think for a moment about what values a society holds and how it lives out those values. Countries like China and Japan were historically based on a Confucian values system emphasizing respect for elders; how this may change (or has already changed) when to be old is not rare or unusual, is unknown.

In the United States, even without the social welfare policies of European “social democracies,” we have a self-image as “child-friendly.” If it remains the case that most American adults are parents, though of fewer children each, this may still be a part of our identity. On the other hand, if the age at which Americans have children continues to climb, and the share of Americans who do not have any children at all does likewise, then fewer of us, generally speaking, will identify as “parents,” with all the consequences that entails.

December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.

What’s the cause of the US fertility decline – and when will it end?

Originally published at Forbes.com on October 1, 2019.

This is, I admit, a headline I simply stumbled upon in looking for something else: “Statistics Finland unveils bleak population forecast – population to start decline in 2031“ from today’s edition of the English-language Helsinki Times.

“Not a single Finnish province will record more births than deaths 15 years from now unless the birth rate rebounds from its current record-low level, indicates a much anticipated population forecast published on Monday by Statistics Finland.”

As a reminder, this is Finland we’re talking about, not a country that ordinarily appears in discussions about ultra-low fertility rates. This isn’t Italy or Japan.

This is Finland, named the happiest country in the world in a 2019 ranking – and was #1 in 2018 as well, #5 in 2017 and 2016, #6 in 2015, #7 in 2013 (there was no 2014 report), according to the World Happiness Report researchers, who combine both objective and subjective measures of well-being and life satisfaction.

And Finland has generous levels of parental leave provision:

Maternity leave begins between 50 to 30 working days before the due date, and lasts for 105 working days, during which time Kela, the Finnish Social Security agency, pays a “maternity allowance.” Fathers can take paternity leave for a maximum of 54 working days and receive a “paternity allowance”; 18 of these days can be taken at the same time as the mother. Then “parental leave” continues for a further 158 days.

After parental leave benefits end, a parent can stay at home, unpaid but with job protection, until the child’s third birthday, and receive a “child home care allowance.” Or parents can choose a daycare center and receive subsidies based on income, paying nothing for low-income families and up to a maximum of EUR 290 for one child, per month, for higher-income families.

What’s not to like?

But yet, here’s the development of the fertility rate over the past decade (according to “Steep decline in the birth rate continued” at Statistics Finland and “The decline in the birth rate is reflected in the population development of areas” for the estimated 2019 rate):

or, in graphical form,

What happened here?

Regular readers will recall that in August I profiled the declining Swedish fertility rate, and in the course of my reading I learned that its extreme cyclicality is attributed to the effects of certain parental leave and other policies causing parents to speed up births temporarily. Putting Sweden and Finland side-by-side (with somewhat less recent data) shows that Finland has been much more stable in its fertility rates, but has collapsed over this past decade.

Is this due to a poor economy? Finland’s unemployment rate rose from a relative low of 7.7% in 2012 to a post-recession high of 9.4% in 2015 but has been declining since then, and now stands at a level of 6.7%, nearly again equal to its pre-recession low of 6.4% in 2008 – which itself is as low as its been since the end of the Cold War. The country’s real GDP growth rate had likewise dropped in the same timeframe, but then recovered and has only slowed slightly since then.

In an interview, Finnish Prime Minister Antti Rinne commented on the decline:

“’It’s a fact that parenthood has substantially reduced the pensions of women. Women’s careers and income development are the key issues we have to tackle to make sure those who are able and willing to start a family can do so. These are major issues,’ he commented.

“Another area in need of development are services, according to him.

“’I’m concerned that maybe we’re not focusing on the right things if we’re not developing the services of families with children. We have to construct the entire service network in a way that families with children feel that they are supported,’ he underlined.”

Do Finnish families feel that the benefits available to them are insufficient? Would a look into the finer points of the system reveal perceptions that the parental leave benefits are inadequate, or that there are waiting lists for daycare slots? Yet there does not appear to have been a worsening of conditions that needs to be rectified, so it’s hard to see this as a cause of this decline. What’s more, Finland was deemed to be the 4th most gender-equal country on the globe, according to the World Economic Forum’s analysis, behind only – you guessed it, Iceland, Norway and Sweden (Denmark, oddly, comes in at only 13).

Now, maybe the Finnish birth rate will perk up again unexpectedly, and perhaps this will turn out to have been a statistical fluke all along. But, as with Sweden, it calls into question the conventional wisdom that the path to replacement-level fertility rates is a combination of gender equality and generous social welfare provision.

December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.

Originally published at Forbes.com on August 9, 2019.

The conventional wisdom goes like this:

Countries which have traditional cultures (and which lack access to modern contraception) have high fertility rates.  Countries in which women want to build careers but there is no social welfare support structure in the form of parental leave, subsidized daycare, and the like (and in which, as a recent Foreign Policy article, “How to Fix the Baby Bust,” demonstrated, workplace culture demands long inflexible work hours), have fertility rates well below replacement.  And countries such as Sweden, with its heavily subsidized, always-available daycare, generous parental leave shared by both parents, and a culture ordered around community and family life rather than work, hit the “sweet spot” of replacement-level fertility rates.

Further, that conventional wisdom goes, the United States had maintained a replacement-level fertility rate due to the high fertility of immigrants, and the high rate of unintended pregnancies.  Now that women are increasingly using LARCs (long-acting reversible contraceptives such as IUDs and implants), we will need new strategies to boost our birthrate and prevent unwanted consequences such as an imbalance in young and old and an insufficient supply of young people to support the aged, and we will need to adopt the generous policies of a country like Sweden to induce more couples to procreate.

Except that the notion of a replacement rate fertility in Sweden is itself a bit of a fantasy.  As of 2018, the total fertility rate in Sweden was 1.76 children per woman.  Among native-born Swedes, it was even lower, at 1.67.  To be sure, this rate is higher than that of such countries as Germany (1.59 in 2016, or 1.46 among women with German citizenship), and even slightly higher than the record low rate of 1.72 recorded in the United States in 2018, but it’s still not the replacement-level of 2.1.

What’s more, the Swedish birth rate has fluctuated considerably and has hit the magic marker of “replacement rate” only rarely since 1970, with troughs in the late 70s/early 80s, again in the late 90s, and a downward trend again since 2010.

What accounts for this?

A 2018 Mercatornet article explains the apparent recovery of fertility rates in the late 80s as a fluke:

It turns out that Sweden’s so-called “success” in the early 1990s was a statistical fluke. A change in policy regarding eligibility for parents insurance, called a “speed premium,” had the one-time effect of reducing the spacing between first and second births. This threw off calculations of the Total Fertility Rate, but this change did not significantly increase the total number of children born per family. Judged empirically, then, the Swedish model simply did not work; its so-called “success” in the 1990s was a Euro-urban-legend.

As to the spike and drop in the 2000s, this article finds an explanation in the rising levels of immigration and growing fertility rates among immigrants, but this would appear not to be borne out by the data.  (Another source claims a much higher divergence between native-born and foreign-born women, and the reason for the discrepancy is not apparent.)  However, if the spike peaking at around 1990 was due to shifting incentives, it stands to reason that the drop and subsequent recovery might be similarly explainable, and a 2008 paper by Stockholm University researcher Gunnar Andersson shows relatively level rates for the other Nordic countries during this time period, and a convergence by Sweden with the remaining three by 2006.

As to the drop in fertility rates since their 2010 peak, the Straits Times reports that this is a worry shared with other Nordic countries, with no particular explanation except for general “financial uncertainty and a sharp rise in housing costs.”

What’s more, Andersson provides further insight into the Swedish approach.  He notes,

An important aspect of Swedish policies is that they are directed towards individuals and not families as such. They have no intention of supporting certain family forms, such as marriage, over others.

He also notes that both the Swedish income tax system and its Social Security system function on an individual basis, with no particular recognition of the marital status of a given individual (see TheLocal.se on the tax system and Business-Sweden.se for Social Security.)  This, among other policies, works to promote the “dual bread-winner model of Sweden.”  Again, Andersson writes,

It is important to note that Swedish family policy never has been directed  specifically at encouraging childbearing but instead have been aimed to strengthen women’s attachment to the labor market and to promote gender and social equality. The focus has been on enabling individuals to pursue their family and occupational tracks without being too strongly dependent on other individuals or being constrained by various institutional factors. Policies are explicitly directed towards individuals and not towards families as such.

The operating assumption is that Swedish men and women will simply naturally want to have replacement-rate numbers of children, on average, so long as there are no impediments to this choice.

Now, it might well be that the present low birth rates in Sweden are again a fluke.  Or perhaps, in the same way as Americans defer car purchases during economic downturns and then return to the dealers when times are good, this was again a pattern of Swedish parents having babies earlier than they otherwise would have, during the pre-recession 2000s.  But, at the very least, these figures call into question the conventional wisdom that the path to replacement-level fertility rates is to emulate Sweden.

December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.