Robert L. Brown
Institute of Insurance and Pension Research
Department of Statistics and Actuarial Science
University of Waterloo
Fertility rates vary from country to country and from time to time.
Many different factors can affect fertility rates—some economic and some social.
Several of these important factors will bereviewed in this article.
* The author wishes to acknowledge the assistance of Claire Norville and Rocio Gomez in the preparation of this article.
Some Causes of Fertility Rate Movements
A fertility rate is a measure of the average number of children a woman will have during her lifetime (obviously limited to her childbearing years). Fertility rates differ betweencountries and over time. Many factors affect fertility rates—some economic and some social. This article attempts to outline some of the major factors that have an impact on fertility rates.
II Demographic Trends in Fertility Rates around the World
In most countries, three general demographic trends have been observed: reductions in infant mortality, increased life expectancy anddecreasing fertility rates.
Over the past 30 years, the average number of children born to women in less developed countries fell from 6.2 to 3.0—an enormous and rapid decline—but still above the demographic “replacement” level which equates to a fertility rate of 2.1.
Europe’s fertility rate has dropped to 1.42, Japan’s to 1.43 and Canada’s to 1.51. Spain has the world’s lowest fertility rate at1.15 followed by Italy at 1.20. Experts state that never have fertility rates fallen so far, so low, so fast, for so long, all over the world. They predict that Europe will lose at least 100 million of its population by the middle of this century as death rates exceed birth rates (Watenberg, 1998).
However, fertility rates are still very high in some of the developing nations of Africa, theMiddle East and Asia. For example, the fertility rate in Nigeria is 5.2 and in Pakistan is 5.3.
One country that does not fit comfortably into these patterns is the United States. While U.S. fertility rates dropped from their (recent) peak of 3.77 in 1957 to 1.85 in the mid 1980’s, the U.S. fertility rate has since climbed to 2.03, which is just barely below the demographic “replacement rate”.What explains these remarkable trends?
III Economic Theories of Fertility Rate Trends
Richard Easterlin (1987)
Easterlin postulated that fertility rates do, and would continue to, rise and fall with a cycle of two generations or about 40 years (peak-to peak or trough-to-trough). He explains that members of small birth cohorts (when fertility rates are low) will have an easier timeentering the job market, achieving good wages and getting promotions. In contrast, those in large birth cohorts (when fertility rates are high) will have problems that can be seen as the mirror image (difficulty in entering the labor force, lower wages and slower promotions).
Those members of the smaller birth cohorts who achieve a higher standard of living sooner, will marry sooner, will havetheir first child sooner and will ultimately have more children in total.
Twenty years later, this new larger set of birth cohorts will find it harder to achieve the same standard of living and will marry later, have their first child at an older age and ultimately have fewer children.
Easterlin combines the above theory with a “Relative Income Theory”. This states that people feel well off(or not) by comparing their actual earnings to their material expectations, the latter of which are a function of their parent’s income. Thus, the “Depression babies” formed a series of small birth cohorts with low material expectations. They found jobs easily and were soon earning more than their parents. Thus, in the 1950’s it was easy for one spouse to stay home and have children.