In times of economic uncertainty women postpone or give up having children: explaining the post-WWII baby boom

As the baby boom generation reaches retirement age, concerns regarding the sustainability of our pension and healthcare systems are mounting. Understanding the origins of this phenomenon is therefore crucial to help forecast future demographic changes and design more adapted public policies.

Several different theories previously existed to explain the sudden rise in birth rates that occurred between the early 1940s and the late 1960s, known as the baby boom. One was the return of mobilised soldiers or the wave of optimism after the end of the war, another was that women who had entered the labour force during the Great Depression and war times had fewer labour market opportunities after the war, giving them more time to raise families. The technological boom that also took place post-WWII affected the ‘home production’ sector, increasing the efficiency of household chores through the dissemination of electrical appliances such as the washing machine or the dishwasher, again giving women more time for childcare. However, these theories have since been proven inadequate in explaining the extent of the baby boom.

In a new study Bastien Chabé-Ferret and Paula Gobbi suggest that having children is perceived to be riskier, and therefore is averted, in periods of high economic uncertainty. Indeed, children require an uninterrupted flow of attention, which is difficult to commit to when economic conditions vary too frequently. On the one hand, they involve financial expenses that are extremely hard to cut in times of hardship. On the other hand, they also need an investment in terms of parental time that may prove very costly if employment prospects suddenly improve.

Using historical data from the US Census, the authors show that the total number of children a woman has is strongly and negatively associated with the volatility of economic conditions this woman faces in her twenties and early thirties. They estimate that variations in economic uncertainty may explain as much as 60% of the one child difference in fertility between the trough and the peak of the baby boom.

The Great Depression and WWII represent a massive surge in economic uncertainty by historical standards, while the post WWII-period has been an epoch of stable economic growth.

Will we face another baby boom?

Interestingly, the fertility rate of cohorts born after 1945 seems much less affected, if at all, by economic uncertainty. Several factors may have loosened the relationship between economic uncertainty and fertility – first, the broadening age window during which women are having children, but also the appearance of new instruments that counteract the effect of economic fluctuations, such as the development of the financial sector or the implementation of various types of safety nets (unemployment benefit, poverty relief programmes, universal health coverage, etc.)

This could have important implications for the current discussion about the impact of the Great Recession on fertility rates. Indeed, birth rates have shown a sharp decline in the US since 2008. However, women now have more flexibility to delay and catch up when conditions are more favourable.

Read the authors’ blog for VoxEU discussing their research here.

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