FERTILITY RATES

Fertility rates vary not only from country to country and from time to time; they can be affected by economic and social factors as well.

TRENDS IN FERTILITY are rated as the most difficult of the demographic variables to project (others being immigration, emigration, mortality, labor force participation, and ages at certain vital events such as marriage). And while fertility rates are extremely difficult

to project and predict, they usually represent the most important modeling variable in any population model. These models, in turn, are of critical importance to many users, including social security actuaries who must use these data to project future benefit/contribution cost ratios.

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). In most countries, three general demographic trends have been observed: reductions in infant mortality, increased life expectancy, and decreasing fertility rates.

Some of 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 to 50 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 time entering 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 have their 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.

Diane Macunovich (1996). Easterlin’s theories assume that females play essentially a passive role in the fertility patterns. Macunovich, on the other hand, adds a factor to the basic Easterlin model that accounts for the female wage impact on fertility. Over the past 50 years, women have obtained higher levels of education, entered the labor force in increasing numbers, and achieved independent monetary resources. Macunovich believes that while an increase in a male’s relative income (versus his material expectation) will cause a resultant rise in fertility rates, an increase in a female’s relative income will produce downward pressure on fertility. These contradictory indications, therefore, need to exist in

any successful theory of fertility rate movement.

Butz and Ward (1977). The theories of William Butz and Michael Ward include three critical factors: the proportion of women in the labor force, women’s earnings, and men’s earnings. As analyzed previously, fertility rates are positively correlated to men’s earnings but are negatively correlated to women’s earnings. During recessions, when family income is lower, couples will have fewer children because of the high direct costs associated with childbearing. However, economic prosperity may not automatically bring higher fertility rates if women’s labor force participation rates rise.

The Butz and Ward model states that times of economic prosperity are the most expensive times for employed women to have children. For women in the labor force, there will be a delay in childbirth and fertility rates can actually decrease. In summary, Butz and Ward explain that fertility rates are positively related to family income and negatively associated with women’s employment and wages. The correlation between women’s wages and fertility is stronger the larger the proportion of women employed.

John Ermisch (1983). Ermisch’s theory distinguishes between women who work and those who do not. Ermisch explains that as more females choose to work most of their lives, the average age at first birth increases and the intervals between births decrease. In particular, women employed in professional positions tend to wait longer between marriage and the birth of their first child.

In single-earner households (with only a male wage earner), if the male wage rises rapidly and the cost of children remains constant, that family will have more children.

For two-wage-earner families, however, where the wife has to leave the work force or interrupt a career path to have children, the opportunity cost of having children is high. A child would demand more of the couple’s time and lower the family’s income due to the loss of the wife’s earnings.

When the number of females in the labor force increases, fertility tends to decrease even during times of economic growth. Ermisch also found that the increased probability of divorce may keep the fertility rate down.

Social Causes

Education: A woman’s education is a critical element in explaining resultant fertility rates and movements. Higher female education is universally associated with lower and delayed fertility. Higher female education, however, is also positively correlated with the probability of the child’s survival. In a somewhat similar fashion, one finds higher fertility in rural areas (especially where this makes ducation more difficult) than in urban areas. This may also reflect differential access to family planning information.

Evidence shows that fertility declines as a country’s population becomes more urban and as women become more highly educated. In Jordan, for example, women with no formal education had a fertility rate of 6.9, while those with secondary school or higher education had a fertility rate of 4.1.

Religion: In places where religion has an influence on fertility, that influence can be strong. For example, Italy and Spain are both countries with a high percentage “Catholic” population. Historically, this would have led to an expectation of elevated fertility. However, Spain and Italy have the two lowest fertility rates in the world. Thus, one must conclude that religion is not as influential in these countries as was the case historically. As another example, the United States is now a more “religious” country than Canada. About 34 percent of U.S. women of childbearing age practice their religion on a weekly basis, which is almost double the 18 percent proportion in Canada.

Greater religious observance tends to go along with higher marriagerates and lower divorce rates. This tends to result in high- er fertility rates because people expect to stay in a more stable relationship and are, therefore, more likely to have children.

Conclusion

Obviously, myriad factors can and do affect fertility rates. Some are economic in nature, others are more social. Clearly, however, couples have more control now over how many children they want to have and when they want to have them. Many families are choosing to start their families later.

This may be due to economic difficulties or the growing fragility of conjugal relationships. Having postponed the birth of a first child, however, delays all childbearing, which often results in a smaller number of children than desired. This, in turn, is a partial explanation of generally falling rates of fertility in industrialized countries, with the United States being a

notable outlier.

Robert l. Brown is director of the institute of

Insurance and pension research in the

Department of statistics and actuarial science

At the university of waterloo in waterloo,

Ontario, canada. He also wishes to

Acknowledge the assistance of claire norville

And rocio gomez in the preparation of this

Article.