Press: The three-child birth policy is coming. In accordance with the spirit of the meeting convened by the Politburo of the CPC Central Committee, China will implement the policy that a couple can have three children and supporting measures to improve the demographic structure and actively respond to the trend of population aging.
What exactly determines the decision people make about how many children they have? In Love, Money, and Children: Parenting Economics, Matthias Doepke, an economics professor at Northwestern University and Fabrizio Zilibotti, an economics professor at Yale University, examine what factors fertility rates in Western countries depend on. They found that the decline in fertility that accompanied economic growth reflected a shift in the number of children invested in to the quality of children. In the pre-industrial era, the return on education was low, and children went to factories very early to work as child laborers, because most of the children who worked could support themselves, so it was "cheap" from the parents' point of view. But with the development of industrialization, education has become more and more important, and raising children has become more and more expensive. Families who provide the best education for their children are keenly aware of the potentially high cost of higher education and are likely to discourage them from having another child.
But this does not mean that the low fertility situation cannot be solved, the authors find that if government policies and local social norms can evolve and develop, so that parents can be compatible with parenting and career pursuit, ultra-low fertility rates can be reversed, and simple birth subsidy policies are relatively ineffective. On the other hand, if men can be persuaded to share more parenting responsibilities, it will be easier for women to decide to have more children.
<h3>Fertility and Child Labour: From Large to Small</h3>
Text | [Us] Marcellis DePuck [Us] Fabrizio Zillibotti
Translation | Wu Xian, Lu Min'er
School | Wang Yongqin
<h3>The "quality" of children and the economics of fertility</h3>
From an economic perspective, people's decisions about how many children to have can be explained by the incentives they face. Motivation depends on the purpose for which people have children and the cost of raising children. Let's start with the purpose. Why do people have children? A simple answer is that evolution sets people to want to have children: after all, people without children can't pass on their genes, so natural selection favors individuals who like to have children. However, the general desire for children does not explain the basic facts we describe about fertility choices. If that's the case, parents will have as many children as possible, bound by being able to bear the costs of raising their children. Poor families close to the subsistence line can only afford to have fewer children. In contrast, a millionaire should be able to raise a large number of children effortlessly. So if all people care about is the number of children, we'll see that just as the rich buy more food and cars, they have more children. But as we've seen, at least over the past 200 years, we've observed the opposite: The richer people get, the fewer children they choose to have.
Nobel laureate Gary Becker was the first to tackle the puzzle of the income-fertility negative correlation, and he did more work than anyone else in applying economic ideas to understanding the decisions parents make. Becker's basic point is that parents generally enjoy having children while also enjoying what Becker calls the "quality" of children. Child quality can be interpreted in different ways, but in general, it means that parents want their children to be successful and rich, i.e. they care selflessly about their children's well-being.
Parents who care about the quality of their children mean that they are faced with two related but different decisions about their children: how many children to have and how much to invest in each child. Thus fertility decisions depend not only on income (or, more generally, the resources available to parents), on the cost of raising children, but also on the relationship between the "number" of children invested (i.e., the large number of children) and quality. From this perspective, the decline in fertility during periods of income growth may be due to the rising cost of raising children, or due to the shift in the pursuit of the number of children to the pursuit of quality.
We believe that the decline in fertility that accompanies economic growth reflects a shift in the number of children invested in to the quality of children, which is driven by economic incentives. Education is the most important form of quality for children. When we talk about investing in the quality of children, we say sending children to school instead of getting them to work, and maybe paying tuition for quality private schools instead of sending them to a regular public school. Schooling is not the ultimate goal; when parents invest in their children's education, they expect that investment to be rewarded in the future in the form of a better financial future for their children.
In the view of economists who study the relationship between economic development and fertility decision-making, the economic trend that has the greatest impact on population transition is the increase in the return on investment in human capital, that is, the increase in the rate of return on education. In particular, the academic contributions of economists Oded Galor and David Weil argue that the high returns on education motivate parents to invest more in the quality of their children and to strive to afford that investment than previous generations of children.
In a pre-industrial economy, most parents had no financial incentive to provide their children with formal education to learn literacy, numeracy, and other skills such as these. Most people don't read, but that's okay, because most jobs don't require literacy. Only some high-level occupations required literacy, such as clergy and scholars at early universities. Such occupations are not open to most people, so parents have little reason to ask their children to be educated. Thus we can see that the lack of economic returns on education explains the lack of investment in the quality of children.
The negative impact of low returns to education is child labour. Children who do not go to school can work early on and help with their families. Thus, the low rate of return on education also explains the prevalence of child labour in pre-industrial times. In fact, the presence of child labor has a greater impact on the cost of having children than educational decisions: most working children can support themselves and are therefore "cheap" from a parental point of view. This explains why it is reasonable to have a lot of children when they can work.
<h3>When child labor was widespread, it was reasonable to have many children</h3>
In the past, child labor was not the exception, but the norm. Before the spread of education in the 19th century, child labor was a necessity for all except children who lived the best. Child labour is not only common; it is also completely unproachable. If anything, it's the opposite: work is seen as good for children, and its opposite — that is, laziness — is considered harmful, because not working prevents children from preparing for future adult lives and may also push them down the path of crime. Before the advent of modern schools for literacy and numeracy, there were places called "work schools", where children who had nothing to do were sent to work or to work schools. Unlike today's "sweatshops," the purpose of these labor schools is not to make a profit from children, but to prevent children who have nothing to do from getting into trouble.
Even today, when child labor is often seen as unethical, exploitative and abusive, many people may still think that some work experience is good for children. This is certainly true for older kids, who can use their summer jobs to get exposed to "real life" for the first time. On farms, it is still common (and legal) for children to help with home work.
Of course, in pre-industrial times and in developing countries today, child labor conditions are not the same as occasionally helping out for hours on modern farms. But the decision to send children to work is put in the context of the family situation, which is often poor in areas where child labor is common. When raising an entire family is a daily challenge and schooling is not a realistic option, having older children contribute to the family's income is a natural choice.
Opportunities for child labour play a role in determining fertility rates, and this interesting and thought-provoking example can be found in the early days of industrialization. Before industrialization, child labor in most cases meant children working with their parents. After working in a factory became the norm, it was also common to hire the entire family (parents and children together) as workers. But there are also new forms of child labor that take advantage of the fact that children's bodies are smaller than those of adults. The mining industry is an important example. The Industrial Revolution was built on coal, so coal mining became a major growth industry during the industrial era.
Coal mines are dangerous, but because workers often have to work in small spaces, children have a special productive function in coal mines. In the mining areas, children's wages are high, and it is profitable for parents to have children work. It is not surprising that in the early 19th century, fertility rates in mining areas were unusually high. This applies not only to the UK, but also to Europe as a whole: mining areas have the highest fertility rates, followed by rural areas, while cities have the lowest fertility rates, while a downward trend begins to occur earlier. These observations support our hypothesis that the potential rewards of child labor motivate parents and have a significant impact on their reproductive decisions.
<h3>Education is on the rise, child labour is decreasing, raising children is becoming more expensive, and fertility rates are declining</h3>
Consider now the relationship between child labour, education and reproductive decision-making in this particular example in Britain, the birthplace of the Industrial Revolution. Because professional craftsmen could be replaced by machines operated by unskilled workers, early industrialization reduced the need for skilled workers. In addition, industrialization initially increased the demand for child labor, not only in mining areas, but also in factories. The most important industrial sector in the early days was textile production, and like the mining areas, there was a demand for child labour: for example, the child's small hands had an advantage in weaving.
However, industrialization has gradually placed a higher demand on human capital. The emergence of large industrial enterprises has led to the rise of management, and the demand for literate and numeracy civilians has increased. The increase in wealth has also led to the expansion of government and the creation of welfare-based states, increasing the demand for public sector civilians.
From a parent's perspective, the growth in returns to education suddenly makes sending children to school a more attractive option. This explains why, in the mid-19th century, long before the advent of public schools and compulsory education, enrolment began to rise rapidly. As is the case today, education began to mean that the children's future economic conditions were better, so altruistic parents stopped having their children work and sent them to school.
The rise of education and the decline in child labor explain why children are starting to become "expensive" in the eyes of parents. They had to pay for school fees; more importantly, children no longer contributed to family income through labor. These factors have shifted parents' incentives to own small families. So the change in the higher demand for human capital in the economy has created a modern education-oriented middle-class family, explaining some of the most important social trends of the industrial period.
In an industrialized world, child labour is now a long-standing memory, with the exception of agriculture. Modern concerns about child labour focus on children working in "sweatshops" in developing countries. Even so, the trade-off between work and education remains today and is likely to continue to influence fertility decisions in the future. For example, in the education system of most German states, academic and vocational tracks are separated. For students in practical secondary and vocational preparatory schools, formal schooling generally ends in the ninth or tenth grade, usually at the age of fifteen or sixteen. Next, many students begin formal apprenticeships to earn a salary. If they continue to live at home (most of them do), they often have to share part of their income with the expenses of the entire family. Decades ago, even if they were academically gifted, working-class children had to earn money as apprentices.
Now, education has expanded further, with more parents expecting their children to stay in school and continue their education, at least to complete high school as much as possible. However, a similar trade-off will arise in higher education. In the United States, because college fees are growing at a disproportionate rate to the growth rate of average income, the educational choices of children from poor families are increasingly constrained by their parents' ability to pay. Conversely, families who want the best education for their children are keenly aware of the potentially high costs of higher education and are likely to discourage them from having another child.
<h3>Explain "baby boomer"</h3>
The trend toward low fertility in industrialized countries has lasted for more than a century, with only one major exception: the "baby boom" period after World War II. In the 1950s and 1960s, fertility rose sharply, not only in the United States, but also in war-torn European countries and Japan.
The first factor to consider when interpreting a "baby boom" is a shift in the main driving force behind changes in reproductive behavior. Increased investment in child quality drove fertility decline decades ago, but in the early postwar period, it was no longer an important factor. At that time, child labour in the industrialized countries had almost disappeared. Education is already mandatory and provided by the public system in advanced economies, so education is no longer an important part of the changing cost of raising children. As the level of education continues to increase, only access to higher education (undergraduate and postgraduate) has an impact on the cost of support. But higher education was cheaper then than it is now, and most students went to well-funded public schools, so the cost of education had only an indirect impact on parents' decisions.
Conversely, during the "baby boom" period, other factors that affect the cost of child support change significantly. In the age of public education and cheap food, the biggest cost of raising children is the time it takes to raise them. There are two different factors to the associated time cost of raising a child. First, it takes actual time to care for children, and second, that time has financial value. The current interpretation of "baby boomers" focuses on these two factors.
First, consider the actual time it takes to raise your child. Some aspects of this time cost vary little or no; for example, pregnancy still lasts about nine months. But there are also time costs associated with more general household chores, some of which have been affected by rapid technological advances and have saved time accordingly.
The spread of manpower-saving household appliances has played an important role. Parents with multiple children know that children seem to be able to make endless amounts of dirty clothes, and dealing with these things still takes a lot of time today. However, compared with earlier, due to the invention of washing machines and dryers, the burden of washing clothes has been greatly reduced. Another time-consuming chore is cooking. Developments in technologies such as refrigerators, dishwashers, electric stoves and microwave ovens have also reduced the time required to cook. At the peak of the "baby boom" in the late 50s, most American households had the above appliances, and before the 40s, such appliances were very rare. There are other complementary innovations, such as the increasing number of semi-finished products in nearby supermarkets, so that parents no longer have to prepare every meal from scratch. Economists Jeremy Greenwood, Ananth Seshadri and Guillaume Vandenbroucke argue that technological changes in family life played an important role in rising fertility in the 1950s.
The opportunity cost of time is an equally important factor. During the "baby boom" period, raising children is still mainly a female job. The opportunity cost of the time a mother spends raising her child is the value of her second-best choice. For example, if having children means having to give up a well-paid job, the opportunity cost of a mother's time is high and her motivation to have children is even lower. The role of time cost suggests that the multiple uses of a woman's time — especially job opportunities in the formal labor market — can influence her reproductive decisions.
In the decades leading up to World War II, it was not common for married women to work away from home. Many professions have "marriage thresholds" that prevent women from working once they are married. This is true in many countries, such as teachers must be single (if they are women; men do not have that threshold for marriage). Today, in many industrialized countries, most married women still work even after having children, so having more children (and spending more time on them) versus spending more time at work is a key issue for fertility decisions.
The long-term trend of increasing female labor force participation means that the opportunity cost of time is rising, and it is inferred that fertility rates should fall for a long time. But in Matthias Doepke's research on "baby booms" with Israeli economists Moshe Hazan and Yishay Maoz, he found that the opportunity cost of time could explain why fertility rose first and then fell in the fifties and sixties. They found that the trend toward increasing labor force participation among married women of childbearing age stopped precisely when fertility rates rose, and thus came to the above conclusions.
Comparing the labor force participation rates of women aged 20-32 (the dominant childbearing age at the time) and women aged 33-60 in the United States, the labor supply of young women was significantly lower than that of around the "baby boom" from the late 1940s to around 1960. During the same period, the labour supply of older married women, who were barely working before the war, rose significantly.
Marcellis and his collaborators argue that the reason for this change can be found in World War II, a major event that changed decisions about women's labor supply. The war affects women primarily through the labor market: When men fought wars in Europe and Asia, millions of American women answered the call to join the workforce and began working in offices and factories. For a significant number of women, the impact on their labor supply is ongoing: they enjoy the experience and continue to work after the war.
So how did the increase in women's employment during the war relate to changes in fertility in the 1950s? It is important to recognize this: mothers during the baby boomer were children or adolescents in wartime, when they were too young to work. Unlike older women who poured into factories during wartime, they were still in school. Even so, the increased supply of wartime women's labor force affected them, and in the late 40s and 1950s, when they became adults, this change changed their job prospects.
The pre-war model in the labor market was that most women worked for a few years when they were young, just before they graduated from high school to marriage. They then quit their jobs and had children. For the generation of women who had just come of age after the war, they were faced with a situation in which millions of women had been working since the war. However, there is a limit to the work that women can do. When wartime production decreased and men returned to work, women working during wartime were replaced. There is still significant gender segregation in the job market, and many women are restricted to positions in certain fields, such as retail and clerical jobs. Marcelliers and his collaborators argue that women who joined the workforce during the war and decided to continue working after the war occupied a large number of jobs that women could do. The high level of competition among older women exacerbates competition in the labour market, drives down wages and, in general, worsens the employment conditions of young women. To put it another way, women's time in the job market is worth less, which means that other options — like marrying early and starting a family — become relatively more attractive.
We can see this effect in the data: during the "baby boom" period, the average age of marriage for women suddenly drops, and as soon as the "baby boom" ends, the age of marriage rises rapidly. Based on the fact that most women begin to have children after marriage, early marriage leads to a temporary and significant reduction in the average age of having the first child (Figure 1). The tendency for women to start having children at a younger age is the main reason for the "baby boom", while fertility rates for women over the age of 30 have barely changed.
All in all, the strongest explanation for the postwar "baby boom" is the decline in the cost of raising children due to technological advances, and the impact of World War II on the female job market. Comparing the "baby boomers" of different countries yields empirical evidence to support the idea that war plays an important role. Technological advances in the family eventually affected all rich countries in a similar way, but only countries that fought in the war experienced additional fertility increases due to changes in the timing of the war.
<h3>The challenge of low fertility</h3>
In most industrialized countries, fertility rates are now below the level of population substitution (i.e., levels that can maintain a stable population size). Figure 2 shows the total fertility rates of some industrialized countries from 1980 to the present. Having 2 children per woman means a long-term stable population size, as each parent corresponds to 1 child. Figure 2 shows that some industrialized countries (such as France, the United States, and the Nordic countries) are now at or slightly below the alternative fertility rate. However, there are also some countries with lower fertility rates of only 1.5 or lower. For example, Japan, Germany, Italy, and Spain. Such low fertility rates, if sustained, can lead to a significant reduction in the population over time. Low fertility rates also amplify the effects of population ageing, which means that the number of young workers is declining relative to the elderly who retire. This can put enormous pressure on the social security system that can afford older support and medical care. Germany's population, for example, is expected to shrink from 80 million today to 67 million by 2060. Today some parts of eastern Germany are already experiencing rapid population loss; with current fertility rates, such scenarios will become the norm faster and faster.
Why do most industrialized economies have ultra-low fertility rates? As mentioned earlier, in advanced economies, the time cost of raising children is a key factor driving fertility decisions. The decline in fertility in the late stages of the demographic transition can be attributed to the increase in female labor force participation prevalent in rich countries after World War II. However, the increase in female labour force participation does not explain why fertility rates have fallen more in some countries than in others. In fact, a particularly interesting phenomenon regarding the current fertility rate is that countries with the highest fertility rates also have the highest number of working women. In industrialized countries, the relationship between total fertility and female labor force participation is now positive: in countries where more women work, women also have more children. All countries with fertility rates above 1.8 have female labour force participation rates above 50 per cent, while low fertility countries are clustered in regions with low participation rates.
Economists James Feyrer, Bruce Sacerdote and Ariel Stern argue that, contrary to the "baby boom" era, women today do not see work and family as mutually exclusive choices: most women do both, so the above model can be understood. The difference between different countries is how easy it is to combine the two. In countries with high fertility and female employment rates, women can easily have children without the distractions of unemployment. For example, France and the Nordic countries offer convenient, affordable childcare. Countries with low fertility rates often lack such childcare facilities, especially for very young children, whose needs are highest for mothers. Another, more common factor in low-fertility countries is social norms, such as the perception that young mothers and children are "fit" to stay at home.
In a study by Marcellis and Fabian Kindermann, he examines the policies that are most beneficial to increasing fertility in industrialized countries. Consistent with the results already obtained, they found that ultra-low fertility rates could be reversed if government policies and local social norms evolved to make parents compatible with parenting and career pursuits. Simple birth subsidy policies are relatively ineffective. It is worth noting that some countries with ultra-low fertility rates have already paid high subsidies for fertility. In Germany, for example, the government supports couples with children through tax cuts and direct money transfers, and subsidies are much more generous than in the United States, but Germany's fertility rate is still significantly lower than in the United States. Policies that specifically support working mothers, such as universal day care for young children, are more effective than direct subsidies. But part of the challenge to this policy is the division of labour within the family: in many cases, countries with low fertility rates are also those where men work the least amount of domestic work. If men could be persuaded to share more parenting responsibilities [e.g., the introduction of "daddy months," which are parental leave specifically designed for fathers, already in place in Sweden and some other countries), it would be easier for women to decide to have more children.
An excerpt from Chapter 7 of Love, Money, and Children: The Economics of Parenting, is abridged and published with the permission of the publisher.