New Paper Explores the Complex Factors Behind Declining Fertility

Fertility rates have fallen off a cliff throughout the developed world, including here in the United States. But why, exactly?

In a new working paper published through the National Bureau of Economic Research, Melissa S. Kearney and Phillip B. Levine review the basic facts and the most popular theories. They contend there’s been a “broad reordering of adult priorities with parenthood occupying a diminished role,” which in turn likely stems from a “a complex mix of changing norms, evolving economic opportunities and constraints, and broader social and cultural forces.”

While Kearney and Levine’s assessment of the evidence is fair, their vague conclusion doesn’t exactly give policymakers a clear route to fixing the problem. The trendlines are extremely alarming in themselves. The authors show that total fertility rates have fallen by half or so since the 1950s in developed countries ranging from Norway to Canada to Portugal. Women in these places are waiting longer to have children and having fewer children in total.

Some countries have seen an especially pronounced drop in fertility since the Great Recession of 2008. The U.S. was around the replacement rate (approximately 2.1) in the mid-2000s, but today has a fertility rate around 1.6.

Again, why?

One factor closely tied to fertility is marriage, Kearney and Levine note, citing a study published right here at IFS. Married people are more fertile than the unmarried, and the decline of fertility has closely tracked delayed marriage and increased singledom. 

However, it’s hard to sort out the full story here, because marriage and kids are something of a package deal. As the authors put it, “the inclination to marry is likely higher for people desiring to have children.” In other words, declining marriage might directly cause declining fertility, or other factors dissuading modern humans from forming families might reduce both marriage and fertility.

Of course, even if marriage in itself is a major part of the story, the policy question then simply becomes how to increase marriage, which presents as tricky of a problem as trying to increase fertility directly.

Another mainstay of the fertility discussion has been the rise of female employment, which heightens the tradeoff between work and family. Across developed countries, the correlation between female labor-force participation and fertility has varied in the past, but now, the authors report, it’s pretty much just flat, and 80-90% of women work in most places.

Kearney and Levine suggest that, in the modern era, we should simply take it as a given that women generally work, and childbearing, instead, is the more discretionary activity. This could mean that efforts to make work more compatible with kids could pay dividends. 

Kearney and Levine contend there’s been a 'broad reordering of adult priorities with parenthood occupying a diminished role,' which in turn likely stems from a 'a complex mix of changing norms, evolving economic opportunities and constraints, and broader social and cultural forces.

Notably, however, Kearney and Levine offer a skeptical take on the narrative of a “child penalty,” a loaded term for the phenomenon in which women’s earnings drop after having a child. They note that this purported “penalty” might reflect a preference to spend more time with children. And they document that, setting aside the major outliers of Israel and South Korea, countries’ child penalties don’t seem strongly correlated with their fertility rates.

Okay, so what about income? It’s long been observed that economic development tends to go along with reduced fertility at the national level, but, paradoxically, individuals who experience income shocks tend to have more kids when their income rises. There’s also good evidence (as Lyman Stone discusses here) that targeting benefits to parents can increase fertility on the margins. Nonetheless, Kearney and Levine conclude, truly large fertility increases, which would be necessary to bring developed countries up to the replacement rate, would be extremely expensive if accomplished solely by paying parents.

Somewhat relatedly, there’s research showing that rising home prices increase fertility among homeowners—but rising prices also, of course, make it harder to become a homeowner to begin with. Cheaper mortgages also seem to boost fertility. Homeownership among young adults declined with the Great Recession, and it’s possible that today’s young see a home as a prerequisite to starting a family.

If that all didn’t feel scattered enough, Kearney and Levine admit that “standard economic factors and policies are likely not responsible for much of the decline in fertility in high-income countries experienced in recent decades.” The missing piece seems to be harder-to-measure “shifting priorities,” or cultural changes that have reoriented adults in the developed world away from kids.

Surveys, for example, show that more Americans see job satisfaction and close friends as very important to a fulfilling life than see marriage or kids that way. Various forms of media, including social media, can also allow new norms to spread. Religion is also declining. People who do become parents are expected to parent more intensively. And don’t forget the norms around contraception and abortion, and the question of how much dads help around the house when moms work!

Kearney and Levine assess all of these topics carefully and reasonably, making the paper a must-read for those who care about humanity’s demographic future. But taking a step back, it seems that a lot of ideas have been thrown against the wall in experts’ quest to understand the fertility decline—and small fragments of each one stuck. To the extent that we understand why fertility rates are cratering, it’s a mishmash of causes, which certainly does not lend itself to tidy solutions. 

Robert VerBruggen is an IFS research fellow and a fellow at the Manhattan Institute.