Income and fertility

There is generally an inverse correlation between monetary 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. In a 1974 United Nations population conference in Bucharest, Karan Singh, a former minister of population in India, illustrated this trend by stating "Development is the best contraceptive." In 2015, this thesis was supported by Vogl, T.S., who concluded that increasing the cumulative educational attainment of a generation of parents was by far the most important predictor of the inverse correlation between income and fertility based on a sample of 48 developing countries. Generally a developed country has a lower fertility rate while a less economically developed country has a higher fertility rate. For example the total fertility rate for Japan, a developed country with per capita GDP of US$32,600 in 2009, was 1.22 children born per woman. But total fertility rate in Ethiopia, with a per capita GDP of $900 in 2009, was 6.17 children born per woman.

Demographic–economic paradox Herwig Birg has called the inverse relationship between income and fertility a "demo-economic paradox". Evolutionary biology predicts that more successful individuals (and by analogy countries) should seek to develop optimum conditions for their life and reproduction. However, in the last half of the 20th century it has become clear that the economic success of developed countries is being counterbalanced by a demographic failure, a sub-replacement fertility that may prove destructive for their future economies and societies.

Causes and related factors

It is hypothesized that the observed trend in many countries of having fewer children has come about as a response to increased life expectancy, reduced child mortality, improved female literacy and independence, and urbanization that all result from increased GDP per capita, consistent with the demographic transition model. The increase in GDP in Eastern Europe after 1990 has been correlated with childbearing postponement and a sharp decline in fertility. In developed countries where birth control is the norm, increased income is likewise associated with decreased fertility. Theories behind this include:

People earning more have a higher opportunity cost if they focus on childbirth and parenting rather than their continued career. Women who can economically sustain themselves have less incentive to become married. Higher-income parents value quality over quantity and so spend their resources on fewer children. From the 1970s to the late 2000s, parental spending increased. At the same time, investment in male and female children changed substantially: in the early 1970s, households with only female children spent significantly less than parents in households with only male children, but by the 1990s spending had equalized, and by the late 2000s girls gained an advantage. In addition, before the 1990s, parents spent the most on children in their teens. After the 1990s, however, the highest spending was on children under age 6 and in their mid-20s. The motives for the increase in parental investment in children, both in terms of financial and time investment are diverse. Anne H. Gauthier and Petra W. de Jong evidence that for middle-income parents in Canada and the US these motives are the goal of providing children with human and social capital to improve their future labor market prospects, the pressures on parents to conform to new societal standards of good and intensive parenting, and the experience of parenting as part of self-development. Philip H. Brown analyzed parenting patterns in rural China and found that more educated parents make greater educational investments in both goods and time with the objective of higher returns to education for children. Religion sometimes modifies the effect; higher income is associated with slightly increased fertility among Catholic couples but is associated with slightly decreased fertility among Protestant couples. Scholars also find a link between the European Marriage Pattern, which is marked by comparatively late marriage and consequently decreased fertility, and the economic growth. This demographic pattern is considered to influence the stock of human capital and thus to contribute to Western Europe's development advantage. Ansley Coale's Three Preconditions for Decline in Fertility asserts that increases in a society's income may increase its fertility, but only if three preconditions are met, summarized as "ready, willing and able". People will respond to economic and social opportunities that make it advantageous to limit fertility, considering the economic and psychosocial costs such as the cost of birth control or abortions. The review of the application of the traditional micro-economic models to the analysis of fertility decisions shows that, from economic point of view, children either are considered to yield utility directly, or are not desired for themselves, but are by-products of sexual activity or investment goods.

Consequences

Across countries there is a strong negative correlation between gross domestic product and fertility, and ultimately it is proven that a strong negative correlation exists between household income and fertility. A reduction in fertility can lead to an aging population, which can lead to a variety of problems, as with the demographics of Japan. Some scholars have observed a dramatic increase in the proportion of young adults living with their parents in Mediterranean Europe. This is a worrisome trend, since this shift in the timing of adulthood could seriously affect the labor supply of young people, overall fertility rates, and European pay-as-you-go pension systems. This fact indicates that declining fertility rates in advanced economies may tend to be self-reinforcing and further exacerbate the situation. A related concern is that high birth rates tend to place a greater burden of child rearing and education on populations already struggling with poverty. Consequently, inequality lowers average education and hampers economic growth. Also, in countries with a high burden of this kind, a reduction in fertility can hamper economic growth as well as the other way around. Richer countries have a lower fertility rate than poorer ones, and high income families have fewer kids than low-income ones.

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