TREND WATCH: What’s Happening? In the United States and abroad, birthrates are down, with a record number of countries worldwide now sitting below replacement-level fertility. Stagnant real wage growth and rising risk aversion have caused many young adults to put off childrearing indefinitely. Fearing an eventual economic slowdown brought on by a shrinking working-age population, policymakers are brainstorming ways to boost birthrates. Many nations are now experimenting with pronatalist initiatives designed to encourage family formation.
Our Take: Political leaders generally frame pronatalism in terms of direct financial incentives to have children, like “baby bonuses.” Most demographers, however, attribute higher or lower fertility to broader forces—such as long-term economic expectations, the ability to merge careers and family life, perceived community support for parents, and even religious intensity. These forces are resistant to easy policy fixes. For now, the debate over what to do about fertility excludes the United States, due to our still-high fertility level relative to other developed countries. But eventually America will have to grapple with the same tough questions that are being confronted elsewhere today.
After decades of limiting population growth, the Chinese government is now urging young families to have more babies. Nearly three years after lifting its one-child policy, the nation's fertility rate remains stubbornly low, leaving officials scrambling for ideas to spur a baby boom. This move has become increasingly common around the world over the past decade, with industrialized nations across Asia, Oceania, and Europe rolling out a wide range of incentives intended to boost births.
Some countries that have done so, including Russia, Japan, and Germany, have seen their rates climb in recent years, but others haven’t been so lucky. The difference is being credited to everything from the policies themselves to divergent economic conditions and even the renewal of civic pride (or lack thereof)—considerations that U.S. officials will have to ponder as calls grow for pronatalist policies in America.
A half-century ago, a mere eight countries reported total fertility rates (TFRs) below the replacement rate of 2.1 births per woman. As of 2015, a record 98 countries are below the replacement rate. Low fertility is an issue that many of them, including most of Europe, Japan, and Canada, have been facing for decades.
Today, the world’s lowest fertility rates are scattered across Europe and East Asia, in countries such as South Korea, Singapore, Greece, Spain, and Italy. America’s fertility rate remains among the highest in the developed world, but it could be said to be underperforming—because, unlike most other countries, America has shown no sign of a post-GFC revival. The U.S. total fertility rate has declined steadily since 2007, dropping to a multi-decade low of 1.76 last year.
WHY THE DECLINE IN FERTILITY?
The longstanding decline in fertility worldwide has been pushed by powerful economic, social, and cultural forces. In its early stages, going all the way back to the mid-1800s, the decisive drivers were industrialization, urbanization, and rising affluence. The expansion of universal social insurance programs in the post-World War II decades also weakened one of the oldest incentives for having children: support in old age.
More recently, the impact of the Great Recession, along with economic constraints such as high living costs and stagnant wages, has left many young adults believing they’re unable to afford children. In a recent Morning Consult survey for The New York Times, some of the top reasons 20- to 45-year-old Americans gave for not wanting children or having fewer children than they considered ideal were the cost of child care, worries about the economy, and financial insecurity. Couples in China cite sky-high schooling costs, while Italians lament high unemployment and few feasible child care options. In many developed economies, the stagnation of median-family living standards has been compounded by a widening income and asset gap between younger (childbearing age) and older (retired) adults.
Meanwhile, the dramatic transformation in the social role of women and the structure of the family has accelerated the decline. The increase in female educational attainment, the massive entry of women into the labor force, and the rising average age of marriage and childbirth have also played a role in depressing fertility over the past few decades. So too has the widespread diffusion of effective contraception and the legalization of abortion. Declining testosterone levels among men (see: “You’re Not the Man Your Father Was”) could be playing a role as well.
The choice to delay parenthood and the decline in the number of accidental pregnancies are tilting fertility rates toward older age brackets in almost every country. For example, in France, Germany, and Japan—though not (yet) in the United States—the birthrate for women in their early 40s is now higher than for women in their late teens (age 17, 18, and 19). With fewer women “hurried” today into having kids before they want them, it has become increasingly common for young people to prioritize personal fulfillment over having kids altogether. In the New York Times survey, the most popular reason respondents gave for not wanting any children was the desire for more leisure time.
As fertility rates around the world have fallen, public concern has shifted from overpopulation to underpopulation. Economists and demographers warn of sweeping consequences: Low-fertility countries face a shortage of young-adult manpower, posing challenges both for their economies and their security forces. Elderly populations will lack financial and familial support. Entrepreneurship and innovation may decline. Ultimately, the working-age population of many nations could well fall faster than productivity rises, resulting in chronic real GDP shrinkage even in the absence of recession—something unheard of in the annals of 20th-century macroeconomic theory.
WHAT ARE DIFFERENT COUNTRIES DOING ABOUT IT?
Over the past decade, dozens of countries have launched pronatalist policy campaigns. Many governments have taken a neoliberal approach by offering direct financial incentives to families with children, such as tax breaks, housing assistance, or discounts on public services. Singapore, France, Australia, Canada, Russia, and Poland have all offered “baby bonuses” per child. In South Korea, parents are awarded a 500,000 won bonus, which is followed by monthly cash allowances that are paid out over the child’s first year and increase with more children.
Other market-oriented policies, whose costs are largely borne by employers, mitigate work-family conflicts in the form of assistance with child care or generous family leave policies. The Czech Republic, for example, offers up to 70 percent of one’s salary during maternity leave. In 2013, Germany made day care for young children a right. Berlin recently announced it that all of its child care centers will be free.
A different approach is to revalorize children and the family. These strategies tend to be more socially conservative, given that they portray the family as the bedrock of civic life. At one end of the spectrum are programs that help individuals find partners or try to keep existing families and tight-knit communities together. Japan, for example, offers funding for local governments that sponsor speed dating or other matchmaking events. Nagicho, a small town in Japan, relies on volunteers to help staff its two nurseries. In China, where the majority of births take place within marriages, several provinces now require couples considering divorce to reminisce about their relationship first, in hopes they can work it out and have children.
An enthusiastic variant of this approach is to equate children with patriotism. In other words, procreation isn’t just good for individual families: It’s a civic duty. Ad campaigns in Denmark and Singapore encourage young couples to “do it for their country.” Hungary amended its constitution several years ago to say that “the family [is] the basis for the survival of the nation.” Poland’s conservative ruling party has made working-class families with kids its top national priority—as evidenced by its comprehensive set of child-centric subsidies.
Perhaps the most extreme example is Russia, which declared 2008 “The Year of the Family” and has since dedicated several national holidays to canoodling, including one that awards mothers if they “give birth to a patriot” nine months later on Russia’s national day. Families with seven children or more can receive a special prize, the Order of Parental Glory.
SUCCESS IS TIED TO ECONOMIC EXPECTATIONS AND CULTURAL NORMS
The results of these policy campaigns have been mixed. Since 2008, fertility rates have risen significantly in Germany, the Czech Republic, Hungary, and (especially) Russia. They’ve seen marginal gains in Japan and China. But in other countries with a pronatalist bent, including France, Italy, and Greece, gains before 2008 are being wiped out by losses since 2008. And Poland and South Korea are still struggling to break a twenty-year downward trend.
Why? Since so many factors play a role in fertility rates, it’s not easy to isolate any single cause of success or failure. But the countries where pronatalist campaigns have worked tend to be doing better economically—and perhaps even more importantly, citizens are more likely to have positive expectations for the future and fewer expectations that a baby would hurt their personal lives or career.
The best way a country can encourage births, most demographers agree, is to set up a society in which marriage and family is well-aligned with other goals shared by most adults—such as adequate income, a rewarding career, and social respect. Research suggests that policies that facilitate work-family balance see the best results over time. Since few political leaders enjoy taking on such a large social agenda, most advocate more targeted initiatives like baby subsidies and child care guarantees. According to demographers, however, “baby bribery” policies have a disappointing track record. While they can change the timing of births—and trigger short-term baby spikes—they are less likely to cause significant increases in the birthrate over time.
In Asia, where traditional Confucian family mores often conflict with the modern market economy, fertility rates have proven resistant to even the most generous fertility bonuses. In Singapore, the total fertility rate remains stuck at an abysmal 1.1 despite decades of lavish income and housing benefits for new parents. Many Japanese women who have chosen not to have children cite a persistent gender gap that makes them doubt they could return to their jobs after having children despite policies that say otherwise. They also feel pressured by traditional cultural norms that make the prospect of domestic life unappealing. “Getting married just means that the guy expects you to stay at home and cook for him,” one Korean woman told The Economist. “Why would I want to do that?”
By making young adults think about economic incentives to have children, moreover, baby bonuses may backfire by making them also think about all the economic disincentives to have children. And in most high-income economies—where leisure time is prized, where the cost of raising children is largely borne privately, and where the cost of retirement is largely borne publicly—these costs are considerable. Indeed, the fact that parents are having their first child at ever-older ages probably means they are thinking more, not less, about the economic costs and benefits of childbearing.
Policies that make a credible appeal to social or civic values may therefore have an advantage over those that appeal only to the pocketbook. In recent years, nations that lean heavily on a nationalistic, values-oriented agenda have seen some of the largest fertility increases. The most striking case, Russia, has defied conventional wisdom among demographers—which is that “lowest low” fertility societies (TFR under 1.3) never recover. Yet Russia has recovered. Its TFR has climbed every year since 2005 to 2016, rising from 1.29 to 1.75, perhaps in part due to Putin’s strident campaign of patriotic and family renewal. (Unfortunately, Russia suffers from such a severe 1990s-era birth dearth that even this fertility revival may not prevent continued population decline through most of the next decade.)
AND YES, GOD TOO MAY PLAY A ROLE
The presence of a grand social goal, something that transcends economic self-interest alone, can be a powerful motivator. Even more powerful is the presence of religious belief, typically unaccompanied by any economic self-interest. Across all of today’s high-income societies, behavioral indicators of strong religious belief (e.g., formal prayer and church attendance) show a strong correlation with fertility. The fertility rate of the “most” religious persons is nearly double the fertility rate of the “least” religious persons—and this ratio is about the same for all major religions: Catholics, Protestants, Muslims, and Jews.
This correlation is of recent origin. According to University of London professor Eric Kaufmann, in his book Shall the Religious Inherit the Earth?, the economic reasons for having kids were traditionally at least as strong as the religious reasons. (And maybe even stronger, since many religions have always endorsed asceticism and celibacy as a path to be closer to God.) Yet in recent decades, as most of the worldly motives to start families have weakened, Kaufmann explains that the call of religion is often the only strong reason left standing.
Could political leaders somehow harness this secular-religious differential to boost fertility? Not easily. Few leaders in the developed world want to call attention to such sensitive culture-war fault lines. And even in Russia and Central Europe, where conservative populists frequently invoke God and the church in trying to persuade citizens to have more kids, there is no evidence that such exhortation can actually make people more religious.
The most compelling instance of religious intensity supporting fertility is the state of Israel, whose lofty TFR (3.1 and rising) is far above any country with a comparable living standard. (At $36,000 per capita, Israel is near the middle of the pack among developed economies.) Many Israelis may also acknowledge a strong national-interest motive for keeping up demographically with their neighbors. The average TFR of all Arab countries combined is 3.3 and falling—which means that Israel may be holding its own in this race.
More interesting, from a long-term planning perspective, is the growing evidence that this fertility differential may change the religious composition of societies over many decades through sheer generational replacement. And that replacement, perhaps, will itself raise fertility rates. Pew Research Center recently published a long-term forecast of changing global religious affiliation between now and the year 2060. The forecast shows that differential fertility alone will cause both Muslims and Christians to grow significantly as a share of the population in nearly all regions of the world and will cause the “unaffiliated” to shrink. (Interestingly, Pew notes in a survey that a large 4-to-1 majority of Americans believe the opposite: namely, that people with no religion will rise over the long run as a share of the world’s total.)
SO WHERE DOES THIS LEAVE AMERICA?
For American policymakers, fertility is a sort of good news-bad news story.
The good news is that the U.S. total fertility rate (TFR) remains near the highest in the developed world. Ditto for the U.S. net immigration rate. Bottom line, this means that the U.S. population (both total and working-age) will remain on a positive if low-growth trajectory for as far as we can project—something not true of most other developed countries and even many emerging market countries.
What accounts for America’s fertility advantage? The U.S. economy is relatively free of cultural barriers that prevent women from merging careers and family life—especially compared to East Asia and Southern Europe. American young people are generally more optimistic and risk-taking, which keeps U.S. fertility rates relatively higher in the youngest age brackets. The influx of immigrant families, at least for the first one or two generations, itself tends to elevate the fertility rate. And, yes, America remains among the most religious high-income societies (as measured by attitude surveys). As we have seen, this too boosts the fertility rate.
That’s the good news. The bad news is that the good news may be fading fast. The level of fertility is positive, but its rate of change is negative.
Let’s start with the TFR itself. A decade ago, America’s fertility rate was third in the developed world (behind only Turkey and Israel). But since the Crash of 2008, no developed country has experienced such a steady fertility decline—so that now we’re tied for eighth place. Russian TFR, incredibly, has nearly caught up with America’s. As for the U.S. rate of net immigration, that too has fallen and seems likely to remain lower for many years to come. And, increasingly, these immigrants hail more from Asia and less from Latin America, which puts an end to the fertility boost America once derived from immigration.
Beneath these adverse quantitative trends, one can point as well to an erosion in America’s traditional fertility drivers. While the U.S. economy remains family-friendly in its culture, the complete absence of public support for family benefits (especially in health care) is emerging as a fertility deterrent. The flatlining of real living standards for households under age 35 is also beginning to erode the traditional optimism and risk proneness of American youth. Millennials are starting to show extreme caution in their long-term choices—for example, with regard to marriage and credit. U.S. fertility rates under age 25, while still above those in most other developed countries, are falling much faster.
This change of direction, some suggest, deserves to put pronatalism much higher on America’s list of policy priorities. And over the last year, there have been some signs of rising interest. During and after the passage of the 2017 Trump tax cut, an acrimonious fight broke out in the GOP between the “pro-family” camp favoring an enlarged child tax credit (headed by Senators Marco Rubio and Mike Lee) and the “pro-business” camp favoring corporate cuts. The feud still simmers, and the issue is beginning to attract attention from academics. Two university professors recently blasted the nation’s antinatalism policy bent in a Wall Street Journal editorial titled “Washington is Biased Against Babies.”
Still, fertility remains a very back-burner issue in American politics—certainly by comparison to the attention it is getting in other countries. Much of this complacency, no doubt, is due to America’s significant fertility and immigration advantage over other developed countries during most of the postwar era. It may take some time for public attitudes to catch up with changing reality.
Also, unlike most European and Asian nations, America’s large size and geographic isolation means that Americans have been much less concerned about being “out-birthed” by stronger and more populous neighbors. (Such fears played a major role, historically, in inspiring France’s very generous child-benefit system.) And even if Americans did have such worries, their government has no tradition of “directing” family formation. With their libertarian instincts, Americans lack the kind of sociocultural heritage that would make it easy for a national leader to regard low fertility as a national challenge.
Yet for obvious reasons, whether fertility rises or falls clearly matters to America’s future. At a personal level, millions of Millennials want kids but feel like they’re out of reach. At a collective level, demography is destiny—for economic growth, for public solvency, and ultimately for geopolitical significance.
Unfortunately for those waiting for action, the effects of low fertility take many decades to manifest themselves. It will take a generation before a decline in the birthrate makes any difference at all in employment. It will take two generations before it significantly cuts the growth trend in real GDP and tax revenues. While personally people are affected right away by the choice to have fewer children, collectively the impact may not be felt until our children’s or even grandchildren’s lifetimes.
So, as the fertility rate continues to tick downward, American lawmakers will probably take their time in confronting the big question so many other developed nations are already struggling with: Why are young people having fewer children, and what do we want to do about it?
