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: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-13-013/EN/KS-SF-13-013-EN.PDF

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.

1/12/2012: US birth rate hit an all-time record low in 2011

The 2011 preliminary data for the US released this week showed 3,953,593 births in the US, a 1% decrease (-45,793) compared to 2010. The US fertility rate of 63.2 per 1,000 women age 15-44 years has now "declined to the lowest rate ever reported for the United States."
Full release here: http://www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_05.pdf

In other words, the US birth rate is now below where it was during the WW2 years and the Great Depression.

Per release:

• The number of births declined for most race and Hispanic origin groups in 2011, whereas the rate declined only for Hispanic, non-Hispanic black and AIAN women. 
• The birth rate for teenagers 15-19 years fell 8 percent in 2011 (31.3 births per 1,000 teenagers 15-19 years), another record low, with rates declining for younger and older teenagers and for all race and Hispanic origin groups. 
• The birth rates for women in their twenties declined as well, to a historic low for women aged 20-24 (85.3 births per 1,000). 
• The birth rate for women in their early thirties was unchanged in 2011 but rose for women aged 35-39 and 40-44.  
• The birth rate for women in their late forties was unchanged in 2011. 

The worrisome trend here is not the decline in teenage births, obviously, but a combination of dramatic fall-off in the birth rates for 20-24 and 25-29 age groups. In addition, increases in 40-44 age group and 35-39 age group are associated with smaller family sizes.

 

• The first birth rate in 2011 (25.4 births per 1,000) was the lowest ever recorded for the United States. 
• The birth rate, the number of births, and the percentage of births to unmarried women each declined for the third consecutive year.  
• The birth rate was 46.1 birth per 1,000 unmarried women aged 15-44 and the percentage of births to unmarried women was 40.7. 

There are two trends working through here:

1. The birth rate in the US has declined in every year since 2007 when the total number of births reached over 4.3 million - an effect attributable to the severity of the economic crisis. As the top chart clearly shows, this is similar to what was experienced during the Great Depression, albeit at a shallower scale. Same took place in the 1970s. The effect of the Great Recession is now more moderate than in the earlier years of the crisis, with 1% decline y/y in 2011 following on 2% drop in 2010 and 3% drop in 2009.
2. Long-term trend to the downside in overall birth rates - the trend clearly present since the late 1950s. The rate of this long-term decline in the US is still benign compared to Europe. In Germany, birth rate currently stands around 1.36 children per woman, while in the US it is at 1.9.