Fertility in Europe

According to the Economist last week “Reports of Europe’s death are somewhat exaggerated“. I can only whole-heartedly agree. I think though, it only fair to add, that reports of Europe’s impending old age are almost certainly not, indeed generally it might be felt that the significance of this phenomenon were rather underestimated, than overstated.

Let me explain.

As the Economist article itself points out, here in Europe a good deal more attention has been being focused on the potential impact of climatic change (which is in and of itself undoubtedly an important topic), whilst, and in contrast, comparatively little coverage is being given to our need to develop a population policy:

though every rich country has a climate-change policy, few have a population one (there are historical reasons for that). And just as everyone whinges about the weather, but does nothing about it, so everyone in Europe complains, but does nothing, about population.

Again I tend to agree. Part of the difficulty comes, I think, from our undoubted tendency to try – as the Economist also notes – to simplify what are undoubtedly complex topics. This simplification processes can in itself produce rather sudden and noticeable shifts in opinion, as we have recently seen in some quarters in the case of climate change. What was previously thought by some to be benign, now is thought to be not quite so benign, and in the process a new global consensus emerges, even if comparatively little seems to have changed in the way of available evidence.

And so it will probably be with demography. In part, if this does turn out to be the case the Economist itself may turn out to be one of the guilty parties, since interesting and useful as this article is, it does most definitely fall into the complacent – things aren’t so bad as was feared – camp.

The article makes 6 main points:

i) “This article will argue that pessimism is no longer justified. It would be too much to say Europe’s population is bouncing back. But its long-term decline is starting to bottom out, and is even rising in a few places.

ii) A long list of US observers – ranging from American observers from Walter Laqueur, an academic, to Mark Steyn, a conservative polemicist – who have been arguing that “Europe is fast becoming a barren, ageing, enfeebled place” are wrong.

iii) That changes in population are not – in and of themselves – either a good or a bad thing in economic terms, since “there is no short-term correlation between population change and wealth” and “Japan and South Korea have even lower fertility than Europe”.

iv) Europe is simply not in decline. “Rather…. it no longer makes sense to talk about Europe as a single demographic unit at all” since “There are two Europes.”

v) Some “very-low-fertility countries can fall into a trap”. (This is a reference to a hypothesis which has been advanced by the Austrian demographer Wolfgang Lutz and his collaborators at the Vienna Institute of demography, although strangely, even while the Economist author uses adjusted data from the VID for the article, Lutz himself doesn’t appear to warrant a mention. I have posted on this hypothesis extensively both on Afoe and elsewhere, and a list of posts can be found here)

vi) “16 European countries, with a total population of 234m, now have fertility rates of 1.8 or more…..They are rare examples of bucking the trend that, as countries get richer, their birth rates fall. Why? There are no obvious answers.”

Of these (iv) (with qualifications see below) and (v) seem to be arguably very much to the point, (vi) is undoubtedly true, (iii) is highly questionable (in substance, though not in the rather constrained form in which the argument is presented, again see below), (ii) is undoubtedly the case, due to the simplistic way in which the argument is often put, and (i) is really not only deeply questionable, but fall foul of exactly the same kind of oversimplification process which the article’s author would want us to reject from Europe’s US critics. A case of double standards?

Well, let’s take a look at what is actually happening.

In the first place, as the Economist argues (and this is undoubtedly one of the strong points of the article) it is simply not satisfactory to talk about Europe as one single demographic whole. There are several Europe’s, and perhaps not two, but four. The general situation can be rapidly grasped by a quick glance at this map which I have put online here.

In the first place we have those countries – essentially France, the UK, Ireland, the Netherlands and Scandinavia – where fertility is at, or near, population replacement rate. The population path here, if you add in a certain quantity of immigration which the comparatively strong economic dynamic of these countries naturally attracts, would certainly seem to be pretty sustainable, and at least a lot more sustainable than in many other countries. As noted above these countries vary considerably in their welfare and tax systems, so it is hard to identify any specific feature which has contributed to their relative stability. This being said, that isn’t the end of the problem, unfortunately, since demographic processes are not only about fertility, they are also about life expectancy, and increases in the latter, which seem to form part of what Federal Reserve Chairman Ben Bernanke recently referred to as an ongoing demographic transition, a transition which is associated with rising population median ages and which is destined, with or without fertility-related problems, to place growing pressure on the health and pensions systems of all OECD countries.

In the second place, and at, as it were, the opposite extreme, we have the former member States of the Eastern Bloc. I single this group out as a special category since they are arguably still operating under the weight of what could well be termed an “asymmetric demographic shock” since their fertility generally plummeted following the coming down of the Berlin Wall. In addition, prior to the coming down of the wall, the mean age at first birth of mothers was significantly below that which could be found in Western Europe (see this map here for an at a glance appreciation) and below ages which are now considered to be the norm for developed societies with services-oriented economies. As a result these countries face what could be called a continuing “birth dearth” as mean first-birth ages move steadily upwards over – and probably over a good number of years to come – as women systematically put off having children to ever-higher ages.

This postponement process can lead many astray into thinking that the impact the process has on Total Fertility Rates (TFRs) is benign, since eventually TFRs may well recover somewhat (if there is not a trap, again see below), and although this debate gets incredibly technical involving comparisons of Completed Cohort Fertility Rates and TFRs, and the study of an issue which has become known as Quantum vs Tempo, one of the obvious impacts is easy enough to understand: with each passing generation the size of the cohort base from which children can be born is reduced, and substantially so – as a result of the missing births. The structural damage which this does to the shape of the population pyramid is known as the negative momentum effect, and this is one of the mechanisms which has been identified as a factor in any possible low-fertility trap.

In the third place we have the ‘Latin’ cultures of Southern Europe – Spain, Italy, Portugal and Greece – where, by and large, significant birth postponement has already taken place (Portugal is something of an outlier here), but where fertility still stubbornly sticks near to the lowest-low TFR 1.3 zone. I think entering the specifics of these countries is going to have to remain beyond the scope of the present post, but my feeling is that Portugal and Italy are much more stuck in the fly-trap than Greece and Spain are (this remains outside my present scope since the explanation of why I think this is the case rests on a development of the economic dynamics of the trap which Claus Vistesen and I are currently working on, which I briefly outline here, and which I sort of spell out in the case of Italy here. In a nutshell, it depends on whether – as a population – you are still young enough to get a housing boom or not).

Fourthly and lastly we have the case of the German speaking countries, namely Germany and Austria (and a part of Switzerland). The German case is by now reasonably well known. Aggregate fertility was, of course, negatively affected by the fertility “crash” in the former DDR, but as the graph appearing in the middle of this post – and which compares the two constituents independently – reveals, fertility in the West is low in its own right, and has been so for a very long time now.

As the Economist notes:

Germany not only has low fertility now, but has had for more than a generation. This suggests that “exceptionally” low rates can persist for decades. Admittedly, points out Michael Teitelbaum of the Sloan School in New York, Germany may simply be odd demographically.

Now while the German fertility pattern is decidedly odd, perhaps one of the oddest of odd features in the recent childbirth patterns there is omitted from mention in the article, namely the relatively higher numbers of women in German-speaking cultures who remain childless (see this chart where you can see the very rapid and significant rise in childlessness – up towards the 25% mark – among German women since the 1950 cohort) and indeed the proportions of women in these cultures who have considered it normal not to have a child. As can be seen in this chart, in answer to the question asked of women in the 2002 Eurobarometer survey about what their “ideal” number of children would be some 16.6% (in the 18-34 age group) declared “none” to be their ideal number of children in Germany and 12.6% in Austria.

These results do tend to give credence to the idea that some part of the low fertility in Germany is structurally different from low fertility in other members of the “lowest-low” group, in that a more significant part of the childlessness may be due to a free and voluntary decision rather than a result of biological infertility produced by excessive postponement.

But high levels of childlessness are not the only significant characteristic of low fertility in Germany, as can be seen from a glance at this chart, which compares the parity composition of childbirth (ie numbers of children) in six EU countries – Italy, Federal Republic of Germany, the UK, the Netherlands, Finland and France – for the 1935 cohort. If we make a direct comparison between Germany and France we can see that not only does Germany have more women who remain childless, of those who have children, a far lower percentage were having third and fourth children.

If we then take a look at the time-series chart for the percentages of children born out of wedlock to mothers in a number of EU countries which I have at the bottom of this post, we can see that in the case of Germany it is noticeable that the percentage of children born out of wedlock remained low in comparison with the UK, Sweden and France right though the second half of the last century, and that the level had stabilized by the 1990s (at around one-sixth of the birth total): this is an interesting result since marriage and the family are specifically protected by the German Constitution and since we have seen how since unification the number of such births has been halved in the east, where “illegitimacy” was previously massive.

So we may well have a rather perverse situation here, whereby “family” (as opposed to child oriented) policy specifically targeted married couples, and – at least in terms of tax concessions – favoured the father rather than the mum, with the result that – given the significant social transformations which were taking place in family types during the period in question – less children where born. Such at any rate is the opinion of the Max Planck Institute for Demographic Research demographer Jan M. Hoem, as argued in this paper (PDF).

So now lets go to point (iii) in my list from the Economist, namely the idea that population change is economic growth neutral. I would say that this was perhaps the most controversial idea in the whole article. The key point to note here I think, is that it is not population SIZE that matters, but population age structure. Changes in age structure effectively produce – as was mentioned in the context of Ben Bernanke and the Demographic Transition earlier – shifts in median ages, and these shifts in median ages do seem to have significant economic consequences. Basically, if we look – yes, actually look – at those societies whose median age has reached the highest level – around 43 – so far – Germany, Japan, and Italy – we can note straight off that each of these has been experiencing economic problems in recent years which to some extent break away from the traditional pattern. I do not wish to go into this in any great detail here (that will be, I think, another post), but basically it could be argued that these three countries all tend to be suffering from congenitally weak domestic consumer demand, and as a result tend to depend on export lead growth for increases in GDP (increases which in the case of Italy remain exceedingly small, due to the inability to meet the export-lead growth challenge).

I have recently gone into all this in some considerable depth in the German case (and here) so I will simply refer the interested reader to this line of argument. But this kind of economic problem will undoubtedly feed-back into the fertility trap problem (if one exists), and in particular by maintaining downward pressure on the disposable income available to young people, both via the tax squeeze that ageing and the associated higher elderly dependency ratios produces (viz, the 3% VAT rise in Germany) and the downward pressure on wages which is being systematic and relentless in both Germany (see this remarkable Q1 2007 wage data from Eurostat, just 0.1% growth in wage costs y-o-y after the boom year of 2006) and Japan (where again wages continue to fall, and here).

So, in summing up, what can we now make of the Economist’s claims that “pessimism is no longer justified” and that “Europe’s population is bouncing back”? Well, I would say that pessimism is rarely justified, since it tends to produce fatalism. On the other hand realism leads me to want to qualify the Economist’s claims in the following way:

* Europe is only bouncing back in parts, so it is hard to draw any real conclusions, in particular a very large part of Europe still has – as can be seen here – around 70% of its population with TFRs below 1.7, and 1.7 is already significantly below replacement level.

* Demographic changes are not processes which only go to work in the very long term, the short term consequences of changing median ages are already real and present.

* The economic consequences of changing population age structures are not growth neutral, but are real and significant.

* As a consequence of all of this we simply cannot afford to continue to give demographic changes the back seat. Europe needs above all policy – rather than complacency – in the face of these changes, and such policies ought to be just as evident in the minds of our citizens as the recent declarations of good intent about the need to act on climate change.

This entry was posted in A Fistful Of Euros, Economics and demography and tagged , , , , , , by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo' is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

16 thoughts on “Fertility in Europe

  1. Edward, I think the problem with the article aren’t in the facts or even the analysis, but the spin. Its complacent attitude isn’t quite warranted by the its own conclusions. I think the problem is it sets out to refute Mark Steyn types (which is commendable) but in the process give the casual reader the wrong impression.

    It’s still an excellent primer on these issues, v. informative and accessible.

  2. “Edward, I think the problem with the article aren’t in the facts or even the analysis, but the spin. Its complacent attitude isn’t quite warranted by the its own conclusions.”

    I agree entirely, and I also with this:

    “It’s still an excellent primer on these issues, v. informative and accessible.”

    I think the main problem – as with a lot of the commentary we are seeing on a lot of topics – is that the author wants to be informative *and* be politically correct. That was why I found it strange that there was no mention of Lutz (when they do mention other academics who at the end of the day know a lot less), since Lutz is campaigning for them to do something, and if he is right that there is simply a fair possibility that some countries may be caught in some kind of trap then this issue needs to be addressed.

    “I think the problem is it sets out to refute Mark Steyn types”

    Yep. So you let these superficial kind of people set the agenda. I don’t think that is how to do things. You are caught between fashionable journalism and fact.

  3. Interesting. I could note how Sweden has social policies to prevent motherhood from being an obstacle to other circuits of life, while Germany and Northern Italy, with low birth rates, have either extremely few daycare centers and/or less andogynous outlooks.

    I think we should consider this causality: As a culture progresses there are less gender-based patterns and women have more careers. Women are also emancipated and realize that housewifery is unpaid, underappreciated labor taken for granted.
    They join the markets, which clamor for more labor as culture progresses. Thus economies grow and birthrates drop, due to the same cause. Now, a society needs women in the market, in the economy and basically everywhere, to the same degree as it needs men. It also needs women having a number of children.

    Naturally, money should be spent to encourage both. Christianists like Steyn would say it’s all due to secularism, lack of nationhood and androgynous, emasculated cultures, proudly citing birthrates of red states and Israel. However, he offers little hard facts that show that said growths aren’t because of latin immigrants or higher birthrates among Israeli arabs, respectively.

    Possibly because he fears and distrusts both groups, yet still want to show that his team is a virile bunch, because their kind of society is his ieal. Notice that almost all his readers gladly lets him have the cake while wiping custard of sneering lips. Sad, no?

  4. Xel is right. The way to increase birth rates is to follow the examples of places like France and Sweden where it is much easier to raise children. When one makes it easier to raise children, one tends to get more of them.

    Germany is starting to talk about these kinds of policies. Right now it is one of the least family-friendly places in Europe.

  5. Thanks Hektor, but while I probably point in the right direction, I’m not on the mark, and I hope this issue gets serious, non-politicized attention from now on, leading to a very effective solution in affected countries.

    I saw a curious note in a past ish of The Economist, where a prominent left-wing female politician in Germany wanted to directly encourage women to have more children due to economic concerns, with another woman, get this – a prominent catholic, warned about encouraging women to be child factories.

    Interesting how things change, no?

  6. Hello Xel,

    “I could note how Sweden has social policies to prevent motherhood from being an obstacle to other circuits of life, while Germany and Northern Italy, with low birth rates, have either extremely few daycare centers and/or less andogynous outlooks.”

    Yes, well this is obviously part of the picture. This is what Hoem and others have been drawing attention to.

    “I think we should consider this causality:”

    Well this is basically what’s called in the literature “second demographic transition” theory. There is obviously a lot of truth in it, although weighting just what is due to what here proves complicated in practice.

    You also need to “factor-in” the birth postponement element, and some version of human capital investment theory helps here. Basically our societies are pushing every time further up the value chain, in part this is due to globalisation and the very rapid development of some substantial low-end of value chain competitors, but in part it is also due to the ageing process and the arrival of large numbers of elderly dependent which means that each individual labour market participant needs to produce more value to support them, so people need more and more education and training to be able to do this work, people start work later and later, and the earning curve stays pretty flat for the 20s age group.

    Basically you might be interested in the Australian demographer Peter Macdonald ‘s 2005 – Fertility and the State: the efficacy of policy paper, which basically argues that in some societies there is a mismatch between formal equality at an institutional level and lack of equality at the interpersonal level (ie in the home).

    But the German case is more interesting, since while the McDonald model might fit Southern and Eastern Europe to some extent it really doesn’t seem to meet the needs of Germany. Here we seem to find an excessive support for the traditional family model having exactly the opposite effect to the intended one.

    “Christianists like Steyn would say….”

    Basically I think it best to try and neatly sidestep this, and treat such uninformed arguments with the distance they deserve, which is why I think it isn’t worth responding in kind.

    I would simply note that two societies seem to have some things in common in terms of fertility – the US and France – and some things are notably different (namely, as Hektor points out, one has a family positive policy and the other doesn’t, although the US of course gives a very high rating to gender equality, which is a big part of the picture).

    Really we all need to stop treating this situation as yet another excuse for a transatlantic football match, and start giving it the attention it deserves. This I think is the core of my post.

  7. Hi Edward, and thanks for taking my post seriously and providing me with information and ideas to consider.

    But, “uninformed”? Steyn has explicitly said that it is secularism that is causing the low birth-rates (thus overlooking Poland’s lower birthrates as compared to the godless Swedes). I’d dig up a link but I guess that the onus is still on me then. I refuse to dredge through his refuse in order to find the column.

    And he also has said that aborting a fetus because it has Down’s Syndrome is equitable to aborting it because there is a genetic precursor to homosexuality.

    I do not target something larger when I correctly describe Steyn, because I think he is unworthy of being called or represent an “American” or “Canadian” in any non-official sense of the word. I despise Steyn as an individual, not as a representative for a society I feel rivals my own, or something like that…

    Birthrates is one aspect of a nation, and I really do not seek to feel a sense of superiority when I compare between nations. I do believe that’s Steyn’s bag.

    I doubt I’ve convinced you, because I am only 18 and hardly where I want to be communication-wise, but I only want to find out what works best to improve people’s situations.

  8. Edward

    Another very insightful post. You’re perfectly right to point out that the political class and the ‘ordinary’ people need to be discussing this as dispassionately as possible and give it the kind of respect which the environmental debate is now starting to generate.

    In the end I think were alking about sustainable populations – what is sustainable from an economic, social welfare, environmental and also cultural point of view.

    My guess is that it is the ‘cultural’ part which makes some people nervous of discussing the whole subject as population change leads to cultural and ultimately political change. Or to put it in simpler terms, one culture or languages loses its perstige or domination in its historic territory.

    Demographers should not be afraid to tackle this question as well as the economic and health-care side of the demographic change.

    This I guess is Steyn’s reason for writing but it shouldn’t be discounted because of that. I have no doubt that cultures or rather languages like France/French and UK/English can accomodate the demographic change – if the birth rate keeps to around 1.9 or replacement. However, as I’ve corresponded with you in the past, I’m afraid very little is done in terms of academic research about the effects of a low birth-rate on a weaker linguistic community, like my own Welsh-speaking community, or even possibly an official state language like Estonian or Lativan.

    It would be instructive to read research on a situation of a community with an historic problem of inter generational language transference (parent/s not passing on language to children) coupled with a non-replaceable birth-rate – a double whammy in effect.

    Linguistic communities with this language transference problem already live with an actual non-replacable birth rate even if the actual ‘real’ birth rate is higher. This is one topic which is not dealt with by academic nor government institutions in the communities which it effects – Wales, Basques, Bretons etc. The problem is further compunded if the labour market deficiency, which a now low birth-rate has partly produced, is dependent on ‘importing’ labour from outside the linguistic community – a population which is unlikely to be linguistically assimulated by a weak linguitic community.

    The article in the Economist gave a deliberate positive spin I believe for political reasons, although, here in the UK, the forecast isn’t as bad as one assumed. However, one doesn’t have to agree with Steyn to agree that demographic change will have massive cultural and linguistic effects on Europe, both East and West, and for different communities for different reasons.

    I hope we can move on and debate these possible changes in the professional and dispassionate manner in which you’ve done. But for that to happen then people need to be aware of the situation.

    It would be good if people who have a cutural and linguistic concern could contribute to the debate without it being, either in reality, or perceived, to be antagonistic towards other communities. This is something many of our policial and academic class are abdicating from.

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  13. In the us the”red states”have higher birthrates than the “blue states”. Does religion play a part in this?

    please respond

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