Sunday, August 18, 2013

18/8/2013: A Baby Recession for Europe?

An interesting and forward looking study from the Eurostat on the demographic fallout from the current crisis predicting a so-called 'baby recession' in Europe. The paper is downloadable here:

The main thesis is that "Fertility is commonly assumed to follow the economic cycle, falling in periods of recession and vice-versa, though scientific evidence is still not unanimous on this. This report looks at fertility trends in 31 European countries against selected indicators of economic recession… in 31 European countries, the economic crisis spread in 2009, while decreases in fertility became a common feature in Europe with a time lag. … In 2008, there were no falls in the rate compared to the previous year, but by 2011, the TFR had declined in 24 countries."

TFR refers to the total fertility rate.

All of this sounds reasonable, and there are some signs that fertility rates might be signaling a crisis-related decline and that such a decline might be coming. However, there is a slight hick up in the data on a number of fronts:

  1. The average TFR is running at 1.595% for the 31 countries sample in 2010-2011 against 2000-2009 average of 1.527%. In other words, the decline is not evident so far, except in one year of 2011.
  2. On country-average for 2000-2009 period, 11 out of 31 countries have been running ahead of average. In 2010-2011 period, same 11 countries run ahead of 31 countries-average. So there is no compositional change on under-performance relative to average.
  3. Over 2010-2011, TFR average for countries was ahead of 2000-2009 average for 24 out of 31 countries. 
  4. Countries that saw TFR decline from average for 2000-2009 to lower average for 2010-2011 were: Cyprus (not in crisis in 2008-2011), Luxembourg (not in crisis in 2008-2011), Hungary (in a crisis), Malta (not in crisis), Portugal (in crisis), Romania (in crisis), Latvia (in crisis), suggesting a very mixed evidence on the links between TFR and crisis to-date.
  5. The weak link is further reinforced by the fact that other crisis-hit countries have fared much better in terms of TFR: Estonia, Ireland, Greece, Spain, Italy, Slovenia, UK, Iceland all posted increases in terms of 2010-2011 average compared to 2000-2009 average.

Charts below illustrate (data from Eurostat report, charted and computed by myself):

Note: in the case of Ireland, weather events had potentially significant impact on 2008 and 2010 birth rates. Adjusting for these effects, 2011 reading of TFR for Ireland is hardly a significant decline.

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