It is a well-established fact that as countries become richer and more developed, fertility rates tend to decline. This phenomenon of declining birth rates with rising income has been observed in most parts of the world. But why exactly do richer families choose to have fewer children?
The Quantity-Quality Tradeoff
One of the most common explanations given by economists for the negative relationship between income and fertility is the quantity-quality tradeoff. As incomes rise, the cost of having children becomes an increasingly important consideration for parents. Raising children requires not just food, clothing and shelter, but also investments in health, education, childcare, and other needs. Wealthier parents may choose to invest more resources per child to give them the best possible upbringing. However, this means they can only afford to have a smaller number of children. Poorer families, on the other hand, spend less per child and thus can support more children on the same income.
Empirical evidence supports the quantity-quality tradeoff theory. Data shows that the share of household income devoted to child-rearing expenses tends to rise with income. Richer families spend more on higher quality education, health care, childcare and other services for their children compared to poorer families. This increased investment in child “quality” comes at the expense of having fewer children.
Opportunity Cost of Mothers’ Time
Another economic explanation looks at fertility decisions through the lens of the opportunity cost of a mother’s time. Raising children requires a huge time commitment, especially in the early years. Mothers with high earning potential may find the opportunity cost of lost wages and career progression to be too high if they have a large number of children. The rise in women’s education and labor force participation that has accompanied economic development has increased the opportunity cost of having children.
We see lower fertility rates in countries where women have greater access to education and economic opportunities outside the home. Female workforce participation is negatively correlated with fertility across OECD countries. Educated women with rewarding careers may choose to have fewer children so they can continue devote time to their professions. If they do have children, wealthier families can afford to outsource childcare by hiring nannies and using daycare centers.
Declining Child Mortality
One theory looks at the relationship from a demographic perspective. In developing countries with high child mortality rates, parents tend to have large families because they anticipate some of their children will die before becoming adults. As countries get richer, child mortality falls due to improvements in health care, sanitation, nutrition and living standards. Lower child mortality removes the incentive to have “extra” children as insurance against early deaths.
The demographic transition model shows a pattern of high fertility rates and high mortality rates in the initial stages of development. As countries progress, mortality rates fall rapidly followed by a subsequent decline in fertility rates. Lower child mortality is empirically associated with reduced fertility. Thailand, for example saw its child mortality rate fall from over 150 deaths per 1000 live births in 1960 to less than 25 by 1995. Total fertility rate dropped from 6 to 2 children per woman over the same period.
Urbanization and Rising Costs
Urbanization is another factor linked to declining fertility rates. In rural farming communities, children are an economic asset as they provide labor for the family farm. Urban families do not have this incentive. The higher cost of housing, education, medical care and other expenses in cities makes large families less affordable.
Developed countries are generally highly urbanized. Even within countries, fertility rates tend to be lower in cities compared to rural areas due to the higher costs. The rate of urban population growth is faster than overall population growth in most regions of the world. Rising urbanization globally will put downward pressure on birth rates.
Access to Contraception
Access to family planning resources also plays a role in fertility decline. Contraceptive use increases significantly once countries attain upper middle-income status. Government family planning programs in developing countries hasten the reduction in birth rates by making contraception more widely available. Education about reproductive health and contraceptive methods can help reduce both desired family size and unwanted pregnancies.
Thailand implemented a nationwide family planning program starting in 1970 which increased contraceptive prevalence from 15% to over 80% by the late 1990s. Free condoms and pills contributed to the rapid fertility decline.
Cultural Factors
Cultural norms and social attitudes also impact fertility behavior. Traditional rural agrarian societies tend to encourage large families and prize fertility. Urban modern cultures tend to emphasize smaller families and individual prosperity. As societies become richer, cultural influences generally shift toward favoring smaller families.
For example, in many developing countries the ideal number of children is four or greater. This desired family size drops to two or three children in most advanced economies. Changes in perceptions around ideal family size, the role of women, and the value of children all contribute to lower fertility.
Government Incentives and Disincentives
Finally, government population policies can affect fertility rates. Some countries actively promote family planning and provide incentives for smaller families. For example, in the 1970s India incentivized sterilization by offering food rations, land, and cash payments. China’s famous one-child policy used fines and restrictions on government benefits to penalize larger families.
While such draconian measures have fallen out of favor due to human rights concerns, governments still have some policy levers to influence fertility behavior. Generous family leave and childcare subsidies may motivate couples to have more children. On the other hand, tax breaks or cash transfers for those with fewer children can help reduce fertility.
Conclusion
In summary, the decline in fertility that accompanies socioeconomic development stems from a mix of factors. Rising incomes increase the cost of raising children, as parents focus more on “quality”. Female education and work opportunities impose a higher opportunity cost for childbearing. Lower child mortality removes the need to have “extra” children. Urbanization and access to contraceptives also facilitate the transition to smaller family size norms. Cultural attitudes typically shift in favor of fewer children. And governments can provide incentives or disincentives to influence fertility decisions.
While the direction of the relationship is clear, the complexity of reasons underlying it means there is no simple explanation for why richer families choose to have fewer kids. The fertility decisions of individual households are driven by a combination of economic considerations, demographic trends, cultural values, and policy environments.
| Country | GDP per capita (USD) | Fertility rate |
|---|---|---|
| Niger | 600 | 6.2 |
| India | 2,100 | 2.2 |
| Brazil | 9,000 | 1.7 |
| United States | 63,500 | 1.7 |
| South Korea | 31,800 | 1.1 |
This table shows example data on the relationship between GDP per capita and fertility rates. Fertility rate drops dramatically as we move from low to high income countries. Niger, with a GDP per capita of just $600 has a very high fertility rate of 6.2 children per woman. At the other extreme is South Korea which has a per capita income over 50 times larger but a fertility rate of just 1.1, far below the replacement level.
Key Facts
- As countries develop economically, birth rates tend to decline.
- Richer families opt for fewer children and spend more resources on each child.
- Female education and labor force participation are associated with lower fertility.
- Urbanization and declining child mortality also facilitate the transition to smaller families.
- Cultural attitudes tend to shift from favoring large families to smaller families.
- Government incentives can influence fertility, but draconian population control measures are now rare.
The negative relationship between income and fertility has been observed consistently across regions and historical periods. Economic development, female empowerment, and urbanization all contribute to the decision of richer families to have fewer children. However, variations in cultural factors, policy environments, and individual preferences mean there is no universal explanation. The complex interplay of demand and supply side forces determine a society’s fertility levels.
Implications
The global population growth rate is slowing, largely due to declining fertility in developing regions. Poorer countries still have higher fertility, increasing the share of global population in Africa and South Asia. Aging populations in rich countries has raised concerns about labor force capacity and fiscal stability of pension systems. Managing the challenges of changing global population dynamics requires nuanced policy approaches. Investments in female education and family planning services can facilitate fertility transitions. However, fertility decisions remain fundamentally personal choices that governments should not control coercively.