On Declining Fertility Rates

Worldwide fertility trends have shown a decline since the last few decades. The global average total fertility rate (TFR) was around 2.3 in 2021. However, there are major differences in TFRs across countries. In 2021, while TFR was 0.8 in Korea, the same metric stood at 6.8 for Niger. It is hence crucial to understand what do these differences and trends mean, and how effective have government policies been to affect fertility rates.

Let us look at the meaning of some important metrics before understanding the implications of their trends. While birth rate is simply the number of births per 1,000 individuals, total fertility rates (TFR) is the number of births per 1,000 women in the reproductive ages of a population. Replacement rate is the total number of children per woman at which a population exactly replaces itself from the one generation to the next. For most countries, the replacement level fertility is roughly taken to be around 2.1 children per woman.

The blog on fertility rates by Our World in Data very nicely explains how and why fertility rates have declined in most countries over time; increase in levels of education and women labour force participation, coupled with economic progress and a shift in culture have contributed to a decrease in the number of children a woman has. The chart below from the same blog shows how the trends in fertility rates have fared for different type of economies.

Declining fertility rates - is it a bad thing?

Given the strain that a huge population puts on resources, infrastructure and services, isn't the decline in fertility rates a good thing? Well, yes and no. Yes, for countries (mostly low income) that have a growing population and lower standards of living because of low education levels, lack of access to proper healthcare and other basic services . No, for countries that have extremely low levels of fertility. Hereafter, we will be focusing on such countries, which have already reached high levels of growth and are seeing a decline in the fertility rates. Let us take Japan as an example. As of 2024, Japan’s fertility rate stands at 1.3. The table below shows the percentage of population by age group.

Data Source: ESCAP; https://www.population-trends-asiapacific.org/data/JPN

Owing to the fact that there are lesser people having kids and there is a rise in the proportion of older people, the growth in Japan’s economy is said to have slowed down because of lesser workforce population, less productivity and a rise in social security costs - healthcare and pensions. Because there is a rise in the number of old-age dependents above the age of 60, the social costs are rising while the tax base is shrinking. Others believe that this should be seen as an inevitable temporary transition owing to the baby boom earlier, and should be an incentive for upgrading to a new socio-economic model.

Government policies for increasing fertility rates

Owing to the rapid decline in TFR, many countries have adopted policies to increase fertility rates. Broadly, there are two ways of increasing population in a country - increasing immigration and boosting fertility rates. While the first option belong majorly to the IR and foreign policy domain (introducing immigration and tourism polices), the second one involves the government developing policies to incentivise women to have more children. In an attempt to increase fertility rates, governments across countries have introduced various forms of pro-natalist policies: from direct cash payments and tax reliefs to subsidised childcare, maternal leave and child benefits. Countries have been spending large amounts of money on pro-natalist policies in order to boost fertility in their populations over the last decades.

Do these policies work?

The impact of pronatalist policies on boosting fertility rates has been extensively discussed. Some believe that these policies might be working on boosting the rates shortly, but not sustain in the long run. Even when spending on family-friendly policies has gone up, birth rates have declined, as can be seen in the figure below.

Article : Why family-friendly policies don’t boost birth rates

When so much is being spent on incentivising people to have more children, why is the effect not being seen? Let us again take an example, this time of South Korea, a country that is currently in news for its declining fertility rates. When asked why would they not want children, the responses by South Korean women broadly were about long-working hours, career growth and extremely high childcare costs. In addition to this, the concern of many is that childcare duties would be disproportionately on them. Indeed, as the use rate of parental leave for children born in 2022 in Korea was 6.8% for men and 70% for women. Hence, some believe that instead of using cash-based incentives alone, there is a need to improve the broader quality of life issues.

With increasing progress, education and workforce participation among women, coupled with the increasing competition, longer working hours, high living costs and structural equality issues, there has been a decline in the number of people choosing to have a child. It calls for solutions that aim to address these issues. This reinforces the fact that there is a need for more than just cash-based incentives. However, this is not to say that cash-based policies won’t work. They will largely improve the lives of many people who are already planning on having kids. When these pro-natalist policies would be combined with other policies that aim to improve quality of life, the result would lead to more long-term effects.

And of course, then comes reality, where policy ideas meets institutions and polity. Why would any government want to focus on policies whose effects would be seen in the long run is a complex issue, maybe for the next time.