The Increasing Importance of Economic Conditions on Fertility

Deniz Dilan Karaman Örsal, Max Planck Institute for Demographic Research

This paper investigates whether there has been a fundamental change in the importance of economic conditions on fertility. Through the 1980s econometric studies had found a mixed, neutral, or negative effect of economic conditions on fertility. Notably, Butz and Ward (1979) concluded even that fertility was counter-cyclical; fertility fell in good times, with rising opportunity costs of childbearing. More recently, fluctuations in fertility appear to have become pro-cyclical, with good economic times coinciding with higher birth rates, and the recent recession with lower birth rates. Here, we use panel methods to study short term changes in aggregate fertility and economic measures in OECD countries from 1976-2008. We find indeed that fertility became positively associated with good economic conditions. Furthermore, the increasing importance of economic conditions was detected for both tempo and quantum.