Economic recession and fertility in the developed world

Tomas Sobotka, Vienna Institute of Demography
Vegard Skirbekk, International Institute for Applied Systems Analysis (IIASA)
Dimiter Philipov, Vienna Institute of Demography

This paper examines the effects of past economic recessions on fertility in the developed world. First we study how fertility levels and trends are affected by aggregate-level indicators of the recession, such as declining GDP levels, falling consumer confidence and rising unemployment. Subsequently, we discuss particular mechanisms and pathways through which the recession affects fertility behavior at the individual level, including the effects of economic uncertainty, changes on the housing market and rising enrolment in higher education. Most studies find that fertility tends to be pro-cyclical and often rises and declines with the ups and downs of the business cycle. Usually, these aggregate effects are relatively small (typically, several percentage points) and of relatively short durations; in addition they often seem to influence especially the timing of childbearing rather than the level (quantum) of fertility. Therefore, the recession-induced fertility changes can often be ‘overrun’ by major long-term fertility shifts that continue seemingly uninterrupted during the recession—such as the fertility declines before and during the ‘Great Depression’ of the 1930s and before and during the oil shock crises of the 1970s. The tendency of recessions to have overall small negative impact is partly explained by differential fertility responses by social groups, family status, age, and parity. Furthermore, various policies and institutions modify or even reverse the relationship between recessions and fertility.