The relationship between wealth and birthrates is complicated
Timothy P. Carney
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Ask a Millennial why he and his friends aren’t having kids as much as Gen. X, and he’ll tell you, “we can’t afford it.” Ask a liberal how to fix our plummeting birthrates, and he’ll tell you, “increase federal spending.” Ask why France and some Nordic countries have more babies than the U.S. does, and you’ll hear, “it’s the social welfare state.”
There’s a logic to this viewpoint: children are expensive. They require you to get a bigger house, and they consume food, diapers, and cheap plastic toys. They incur medical bills and tuition bills, all while destroying your stuff. And like a slacker roommate, kids do all this while not paying their portion of the rent.
It’s natural, then, to assume that people would have more kids if they had more money. The problem is, there’s tons of evidence to the contrary.
The wealthiest countries in the world have the fewest babies. Luxembourg has a Total Fertility Rate of 1.4 per woman; Ireland has 1.8, and Norway has 1.7, according to the United Nations. The most fecund countries, meanwhile, are poor — Niger, Somalia, and Congo.
The U.S. had a higher birthrate during the Great Recession than it did in 2019. Birthrates dropped during the roaring 1920s, the stabilized during the Depression of the 1930s. What’s more, wealthier households in the U.S. have lower birthrates than middle-class households, which have lower birthrates than poor households. (The exception is very wealthy households, which have a lot of babies.)
Swedish demographer Martin Kolk has weighed in here, with a new study that concludes that, indeed, the relationship between wealth and babymaking is complicated.
Kolk looks at multiple measures of wealth, including job earnings, government benefits, and all income accumulated over a lifetime. He compares men to women, and he compares older cohorts to younger cohorts who benefit from a more expansive Swedish welfare state.
One finding: Men who earn more money have more babies, but this is not true for women.
A separate, almost contrary finding: if instead of annual income you count “accumulated income” over one’s lifetime and include government benefits, then you get a changing relationship over time. Women with more accumulated income used to have fewer babies, but now they have slightly more babies.
So does this suggest that government money makes childbearing more affordable? Not exactly.
First of all, the connection between “accumulated income” and family size partially reflects the simple fact that Sweden pays big families bigger benefits than it pays smaller families. This doesn’t show that money yields kids, but that in a generous welfare state kids yield money.
More importantly, poorer women don’t simply have less money, they are also less likely to be married. What’s more, higher-income women are more likely to be married to higher-income men. This leaves open the possibility that the real driving force here is simply men’s income.
With birthrates plummeting around the world, it’s tempting to try and buy our way out of a Baby Bust. But the numbers show that it’s not that simple.