Fertility Economics: What the Data Shows
An empirical analysis of declining birth rates, policy effectiveness, and the structural factors shaping family formation in developed economies.
Key Thesis
Declining fertility rates in developed economies are primarily driven by structural economic factors—housing costs, childcare affordability, and labor market conditions—rather than cultural preferences. The data suggests that people want children but face significant barriers to family formation.
The Numbers
The Fertility Gap
A persistent gap exists between desired and actual fertility across developed nations. The average American woman's ideal family size is approximately 2.2 children, while the actual total fertility rate stands at 1.6.
Understanding why this gap exists is crucial for effective policy design.
When surveyed about barriers to having their desired number of children, 72% of women cite economic constraints or partnership barriers—not a lack of desire for children.
Primary Barriers to Desired Fertility
The Changed Cost Structure
The costs associated with family formation have restructured significantly over the past generation, even as aggregate income has risen.
Housing
51% of U.S. fertility decline can be explained by housing costs alone.
Bottom income quintile spends 30-40% of income on rent before childcare.
Childcare
National average: $13,128/year (2024), up 29% since 2020.
Single parents pay 35% of median income. Federal "affordability" threshold is 7%.
Structural Reality
Costs for family formation have outpaced income gains for key demographics.
Previous generations faced fundamentally different cost structures.
Cross-National Comparison
Examining countries with similar economic development levels reveals the role of policy in fertility outcomes.
| Country | TFR (2023) | Maternal Deaths per 100k | Childcare Cost % of income | Paid Leave weeks (mother) | Family Spend % GDP |
|---|---|---|---|---|---|
| United States | 1.6 | 22.3 | 23-37% | 0 | 0.6% |
| Sweden | 1.7 | 4 | 4% | 69 | 3.4% |
| France | 1.8 | 8 | 9% | 42 | 2.9% |
| Japan | 1.2 | 4 | 7% | 58 | 2.0% |
| South Korea | 0.72 | 11 | 8% | 65 | 1.5% |
Family Spending (% GDP) vs Total Fertility Rate
X-axis: Public spending on families (% GDP) | Y-axis: Total Fertility Rate
Key observation: Countries investing heavily in family support (Sweden, France) maintain higher fertility rates. The U.S. stands alone among developed nations with zero federal paid leave, the highest childcare costs, lowest family spending, and highest maternal mortality. Policy environment matters.
Case Study: Quebec's Childcare Policy
A natural experiment demonstrating the relationship between childcare affordability and fertility outcomes.
The Intervention
1997: Quebec launches $5/day universal childcare
2004: Raised to $7/day
2015: Income-scaled fees ($7.75-$21.20)
Coverage expanded from 4-year-olds to all preschool-age children.
The Results
TFR increase (2000-2009)
Maternal employment (64% to 80%)
GDP impact (1.7% increase)
"If we make having kids cheaper, people will tend to have more children."
— Tammy Schirle, Economics Professor, Wilfrid Laurier University
Quebec outpaced Ontario's fertility rate after 2005—the first time since the 1950s. Statistics Canada attributes this directly to the childcare policy intervention.
Policy Effectiveness
Not all family policies are equally effective. Research consistently shows that service-based interventions (childcare, parental leave) outperform cash-based interventions (tax credits, baby bonuses).
The difference is significant: paid leave and childcare expansion show 80-85% effectiveness in cross-national studies, while cash transfers and tax exemptions show only 25-45%.
Policy Effectiveness Rankings
Conclusions
The fertility gap (desired vs actual children) suggests latent demand exists.
Economic barriers—not cultural preferences—are the primary constraint on family formation.
Housing costs alone explain roughly half of recent fertility decline in the U.S.
Countries investing heavily in family support maintain higher fertility rates.
Service-based policies (childcare, leave) are more effective than cash transfers.
Addressing structural barriers may be more effective than pro-natalist rhetoric.
Data Sources
OECD Family Database | OECD SOCX Database | U.S. Census Bureau
Commonwealth Fund | Statistics Canada | Opportunity Insights (Raj Chetty)
Institute for Family Studies | Oxfam "Time to Care" (2020)