If you had more money, would you have more children? Economists refer to goods that you purchase more of when your income increases as “normal” goods and those that you purchase less of as “inferior” goods. For example, steak dinners are likely to be a normal good while mac and cheese is likely to be an inferior good.
Casual observation of data on fertility rates would suggest that having children is an inferior good. Across countries, there is a strong negative correlation between GDP and fertility, and within countries there is a strong negative correlation between household income and fertility. That is, richer countries have lower fertility rates than poor ones, and high-income families in a given country have fewer kids than low-income families do.
But there are two major challenges to interpreting these correlations as evidence that income causes fertility to drop. First, individuals and families with higher incomes often have other characteristics—such as higher education levels, stronger commitment to the labor force, or a preference to live in urban locations—that distinguish them from the general population and might affect their fertility decisions. Second, the observed relationship between income and fertility might simply reflect the effect that fertility decisions have on income (rather than the other way around).
Richer countries have lower fertility rates than poor ones, and high-income families have fewer kids than low-income ones.
The gold standard to solving both of these problems is the use of a randomized experiment, which in this case would entail randomly assigning families to receive extra income and seeing whether those families had more children than families in a control group. Running such an experiment would be too expensive for even the largest research grant. However, natural experiments often arise that approximate the nice features of a randomized experiment by creating a sudden change in family income or wealth that is unrelated to decisions of the family. Two recent papers have identified such natural experiments, and both contradict the assumption that richer people have fewer kids. Rather, in the situations they studied, when families have more money, they have more children.
Thefirst paper1by Dan Black, Natalia Kolesnikova, Seth Sanders, and Lowell Taylor exploits the increase in world energy prices in the mid-1970s as an exogenous shock to income of individuals living in the Appalachian coal-mining region (including counties from Ohio, Pennsylvania, Kentucky, and West Virginia). They find that the coal boom greatly improved the income of men in coal-rich counties but not the other counties in these same states. Along with their increasing income, the coal-rich counties exhibited an increase in fertility. In fact, they find that a 10% increase in income results in an 8% increase in birth rates.
The figure below shows the difference in the number of children ever born to women born in coal-rich counties compared to women in other counties in the same four states. The figure uses a three-year moving average across birth cohorts. The vertical bars indicate the birth cohorts that correspond to women who were 30 years old at the start of the coal boom or 33 at the start of coal bust, when energy prices fell.
Thesecond paperby Michael Lovenheim and Kevin Mumford exploits the change in wealth brought about by large increases (or decreases) in home values over the last few decades. In 2004, home equity accounted for 84% of household wealth for the median homeowner between the age of 25 and 55, so changes in the value of a family’s home have a very large impact on their net worth. Examining data from 1985 to 2007, Lovenheim and Mumford use short-run home price variation over time within cities as their shock to family wealth. They find that a $100,000 increase in the value of one’s home results in a 16% increase in the probability of having a child.
Both of these studies undermine the common assumption that income decreases fertility. The negative correlation between the two is probably driven largely by a failure to compare similar households (whose only major difference is income) or to account for societal changes that have opposite effects on income and fertility. At a personal level, these results suggest that if your spouse gets that big raise at work or you receive an unexpected windfall, you shouldn’t be too surprised if you end up welcoming a new addition to the family.
Joseph Price is an associate professor of economics at Brigham Young University. He specializes in research related to labor, family, and health economics.
1Dan A. Black, Natalia Kolesnikova, Seth G. Sanders, and Lowell J. Taylor,“Are Children ‘Normal’?”Review of Economics and Statistics2013 95:1, 21-33.
FAQs
There is generally an inverse correlation between income and the total fertility rate within and between nations. The higher the degree of education and GDP per capita of a human population, subpopulation or social stratum, the fewer children are born in any developed country.
Why does poverty increase fertility? ›
All children born into poverty, especially girls, have little opportunity to escape from it in adulthood because of the lack of education and power. Another cause for high fertility rates is the large unmet need for family planning among the poor.
What is the economic factor affecting fertility? ›
"Improvements in economic development, such as higher educational attainment, increasing employment in the formal labor market, and the shift away from agriculture, seem to have a doubly-powerful effect because they not only raise individuals' standards of living, but also correlate to declining fertility rates, ...
What affects fertility rate? ›
If couples are only having sex once a week, the chance of getting pregnant is less because there will be less fresh sperm present in the female genital tract at the time of ovulation. Overweight women who have irregular periods are less likely to release an egg each month (ovulate) than women with regular periods.
How does income affect pregnancy? ›
In pregnant women, low SES can increase the risk of adverse pregnancy outcomes. Previous studies have revealed that low SES is associated with pregnancy complications such as abortion, preterm delivery, preeclampsia, eclampsia, and gestational diabetes [3,4,5,6].
How does employment affect fertility? ›
Evidence from the 2008 recession shows that fertility rates dropped more in regions with higher unemployment rates and where labour market conditions deteriorated at a higher rate than in regions less affected by the recession (Matysiak et al., 2020).
Does poverty lead to high fertility True or false? ›
Richer countries have lower fertility rates than poor ones, and high-income families have fewer kids than low-income ones.
Can poverty cause infertility? ›
A cohort study on the UK Primary Care Database [16] confirmed the interaction between age and SES on the risk of infertility. Research has shown that women from more socioeconomically deprived groups have recorded higher rates of fertility problems than other women before the age of 25 years.
Who is more responsible for infertility? ›
Overall, one-third of infertility cases are caused by male reproductive issues, one-third by female reproductive issues, and one-third by both male and female reproductive issues or by unknown factors. To conceive a child, a man's sperm must combine with a woman's egg.
What are the five main factors affecting fertility? ›
Fertility is no exception. A number of lifestyle factors affect fertility in women, in men, or in both. These include but are not limited to nutrition, weight, and exercise; physical and psychological stress; environmental and occupational exposures; substance and drug use and abuse; and medications.
Risk factors
- Age. Women's fertility slowly declines with age, especially in the mid-30s. ...
- Tobacco use. Smoking tobacco by either partner may lower the chances of pregnancy. ...
- Marijuana use. Marijuana may affect fertility, but more research is needed. ...
- Alcohol use. ...
- Being overweight. ...
- Being underweight. ...
- Exercise issues.
Factors associated with increased fertility include the intention to have children, remaining religiosity, general inter-generational transmission of values, high status of marriage and cohabitation, maternal and social support, rural residence, a small subset of pro-family social programs, low IQ such as ...
How does income affect fertility rate? ›
It suggests that as parents get richer, they invest more in the “quality” (for example, education) of their children. This investment is costly, so parents choose to have fewer children as incomes rise. Historically fertility and GDP per capita are strongly negatively related, both across countries and over time.
Why is fertility declining? ›
Dr. Christopher Murray, senior author of the study and director of IHME, said there are many reasons for this shift, including increased opportunities for women in education and employment and better access to contraception and reproductive health services.
What is fertility in economics? ›
The fertility rate at a given age is the number of children born alive to women of that age during the year as a proportion of the average annual population of women of the same age.
Do higher income families have less kids? ›
For women in the U.S., there is an emerging U-shaped relationship between education and fertility. However, as in many countries, there is still a negative relationship between personal income and fertility for women, such that high income women tend to have fewer children than low income women.
What is the biggest impact on fertility? ›
Age is the single most important factor affecting a woman 's fertility. While good health improves the chance of getting pregnant and having a healthy baby, it doesn 't override the effects of age on a woman 's fertility.
What contributes to fertility issues? ›
A number of lifestyle factors affect fertility in women, in men, or in both. These include but are not limited to nutrition, weight, and exercise; physical and psychological stress; environmental and occupational exposures; substance and drug use and abuse; and medications.
