/// THIS WEEK
Earners,
Lately, I have taken note of the change in attitude towards kids, primarily with Gen Z. From personal conversations to general observations, it seems like there is little to no interest in having kids.
I assumed it was due to financial constraints, because the cost of raising a family is very expensive.
This week, we’re diving into this demographic shift. How young people seem to be moving away from traditional modes of family building, if those who went down this path regret their decisions, and where might we go from here.
[ QUICK DEMOGRAPHY LESSON ]
Fertility rates have long been discussed in academic circles. Demographic studies are focused on three (sometimes four, depending on who you ask) areas: marriage, fertility, and mortality. Honourable mention to the fourth area: immigration.
Fertility, which is loosely what we are discussing here, has always been important as it is a linked driver of population change. I want to introduce you to some terms that might help you think about fertility:
Total fertility rate (TFR): The expected number of births a woman would have if she experienced the current age-specific fertility rates over her entire reproductive life. This measure is key to population growth, as it indicates how many children a woman can have for the population to exactly replace itself from one generation to the next without migration.
Cohort Fertility Rate (CFR): The average number of children women born in a given year (or in a given cohort like Millennials or Gen Z) actually had during their entire reproductive lives (ages 15 to 44 years). CFR can therefore only be calculated for women aged 45 or older.
General Fertility Rate (GFR): This is defined as the number of annual live births per 1,000 women of childbearing age (ages 15 to 44 years old).
Population growth has been slowing down in North America for several years. This is driven by multiple factors: an increased number of deaths due to an aging population and lower net immigration (Kearny and Levine, 2021). In the U.S., the TFR declined from 2.12 in 2007 to around 1.65 in 2020 and 2021, which were the lowest levels ever recorded (Kearny, Levine, Pardue, 2022). This pattern continues to decline, and a delay in family formation alone cannot explain this shift; women are simply having fewer children throughout their childbearing years.
Figure 1. Trend in the U.S. General Fertility Rate (1980-2020)
*Even with the slight jump after 2020, trends have returned to the previous downward path (Kearny and Levine, 2023).
[ WHY IS THIS HAPPENING ]
Demographers believed that declining fertility rates were a reflection of a delay in childbearing to older ages. However, if this were true, we would expect the trends shown above to be temporary. It is also important to note that the U.S. is not unique in this trend, where other high-income countries are also showing dropping TFRs.
Figure 2. Total Fertility Rate in High-Income Countries (1980-2020)
Deciding to have a child is rooted in economic theory. The theory essentially posits that people are more likely to start a family when they have the disposable income to cover associated costs (Becker, 1960). Consequently, increased income leads to a higher demand for children, while rising child-rearing costs reduce that demand.
However, this theory overlooks real-world factors like credit constraints, job fluctuations, inflation, and other transient changes. In a booming economy, having a child seems like a feasible next step, while economic downturns make it seem like something to put off.
[ WIDER IMPLICATIONS ]
What puzzles demographers is that even when they test for other socio-economic factors that might increase population growth (i.e., relief in housing costs, improving employment outcomes, forgiving student debt, etc), they find no empirical evidence to suggest that these changes might change the declining fertility rate (Brainerd, 2014).
The more likely explanation is that priorities have shifted across cohorts; particularly, childbearing patterns have shifted across cohorts of young adults.
Figure 3. Children Ever Born by Mother’s Age, by Mother’s Birth Cohort
This figure shows a comparison of the childbearing profiles across cohorts, suggesting that recent cohorts of women are not simply delaying childbearing. They are having fewer children at all ages. Women who grew up in the 90s were daughters of the 70s generation. In other words, it’s possible that recent cohorts of women were raised to explore life outside of motherhood.
In the featured episode, I discuss whether people who decided to forego building a family regret this decision, and I’m curious, where does this leave you?
Earn more,
TCE
To watch the featured episode, check out the video below:
