Income and fertility: evidence from Norway in the last two centuries

Background

A growing literature has found that early life conditions including income around birth can have lasting health consequences. Since children born in poorer conditions tend to have worse socio-economic and health outcomes in adulthood, it is important to understand how the timing of births varies across the business cycle. Women may time their fertility in response to variation in labour market returns, for instance, working more in booms and being more likely to have babies in recessions. On the other hand, as children are costly, some women may avert birth in recession. Moreover, this relationship may vary with economic development in line with changes in the opportunity cost of women’s time and in the returns to human capital investments in children. A key contribution of this project is that it investigates the fertility-income relationship over almost two centuries, 1846 to 2016, using business cycle variation to identify the relationship and rolling window regressions to identify changes in the relationship over time.

Our work is related to three streams of the literature. The first has explored the role of income in explaining the historical decline in fertility during the demographic transitions of most of today’s developed countries, circa 1870-1920. Evidence on the role of income growth in explaining the demographic transition is mixed. A second stream of research has looked has looked at the fertility-income relationship in contemporary settings. Negative associations of both economic development and female labour force participation with fertility have been documented in advanced economies but have been shown to change sign since the 1980s. A third and related literature has found that fertility declines in periods of high unemployment.

Project Aims

This project documents the relationship between fertility and the business cycle and how it has evolved over the last two centuries for Norway using historical data for Norway 1846-2016 on GDP and birth rates. The sample spans the pre and post-demographic transition years the introduction of universal suffrage, the creation of the welfare state, the post-war baby boom, the movement of women into the labour market and more recently the expansion of government support for families.