Stop penalizing mothers and embrace immigration to halt waning birth rates

Birth rates are in decline worldwide, which could have important economic consequences. But how should countries respond to this accelerating trend?

Do Better Team

A World Bank graph depicting the decline in global birth rates offers an alarming visualization of a problem receiving increasing attention. In June, The Economist reported thatglobal fertility has collapsed,” and warned of “profound economic consequences.” 

“Whatever some environmentalists say, a shrinking population creates problems,” it wrote. “The world is not close to full and the economic difficulties resulting from fewer young people are many. The obvious one is that it is getting harder to support the world’s pensioners.” 

But according to the United Nations Population Fund (UNPF), the picture isn’t so bleak — we just need to change the narrative. 

The power of choice 

“Despite fears that soon there will be ‘too few’ people to sustain our economies, services and societies, experts say falling birth rates do not spell disaster,” the organization wrote in the UNPF State of the World’s Population 2023

The significant disadvantage of mothers in the labor market explains why they choose to remain child-free

 “They are hallmarks of demographic transition and correlate with rising lifespans. Since 1950, global average lifespans have increased by almost 28 years. These developments are an indication of the increasing control that individuals, particularly women, are able to exercise over their reproductive lives — and how quality of life improves with access to rights and choices,” it says. 

And with mothers at a significant disadvantage in the labor market, it’s little wonder more women are choosing to remain child-free. 

Uneven playing field 

“Data from Denmark show that there is a penalty for women having children: the arrival of children creates a long-term gender gap in earnings of about 20 percent,” say Claudia Hupkau and Jenifer Ruiz-Valenzuela in a 2021 Esade EcPol report

Having children creates a long-term gender gap in earnings of about 20 percent

“In Spain, research from 2020 concludes that in the first year after the birth of the first child, the mother’s income falls by 11 per cent while the father’s income remains unchanged. This percentage rises to 28 per cent 10 years later. Women with children under 15 are also twice as likely to be unemployed as men with children of the same age.” 

For women without children, the playing field is a lot more even. “Childless women have practically reached convergence with men in terms of labor participation,” Hupkau and Ruiz-Valenzuela say.  

Embrace immigration

Not all countries are experiencing decline: populations in Central, South and Southeast Asia, Latin America, the Caribbean and North America are all growing. But in Europe, deaths outnumber live births, resulting in a 2022 population reduction of 1.3 million. 

When this figure is adjusted for net migration, there’s an overall increase of 2.5 million. But despite the economic benefits, the very people who stand to benefit from immigration are often those who oppose it

“More immigration, especially in rapidly aging countries, would help slow the growth of the age dependency ratio,” economist Giovanni Peri wrote for the IMF in 2020. “While immigrants will eventually age, a significant inflow of young working-age people during the years of greatest native decline will allow a gradual and more manageable transition.” 

But, he adds, older people have more negative attitudes toward immigration than younger generations. 

Have faith in Gen Z

“This is paradoxical,” he says. “They are the group that stands to benefit the most from immigration: the pension system would be on a more sustainable trajectory, working immigrants do not threaten their jobs, and immigrants work in services often targeted to them, such as caregiving.” 

Millennials and Generation Z have more positive views of immigration

And despite vote-chasing policies that focus on tightening rather than embracing immigration, Peri says the landscape will change. 

“In Europe, surveys suggest that millennials and Generation Z have more positive opinions of immigration than do older generations. As the current younger generations are exposed to more immigration, if they maintain such attitudes as they become older and see their voting power increase, they may support more open immigration policies. Then the positive demographic returns from immigration may be more fully realized.” 

Pension poverty 

Until then, the downward trend in the number of children born in the EU that began in 2008 remains a cause for concern for many. In Spain, which has one of the lowest fertility rates in Europe, a fifth of the population is over 65. And according to Statista, nearly 19 percent of these are at risk of poverty

“On average, 40.3 percent of the spending among this age group is channeled towards housing, water, electricity and fuels, which leaves little room for spending on other items for those millions of people whose retirement pension is not even close to the national minimum wage,” says the global data and business intelligence platform. 

Empty schools

And while the Spanish population ages, its schools are slowly emptying. “Between 2013 and 2023, Spain lost 450,000 children under 16 years of age from compulsory stages of education,” write Lucas Gortazar and Jorge Galindo in a September Esade EcPol Report.  

While the Spanish population ages, its schools are slowly emptying

The situation is likely to have a significant impact on a country already experiencing “profound territorial inequalities,” they warn, and urge policymakers to embrace the opportunity to reform school funding.  

Otherwise, they conclude, “if Spain already has a notably polarized educational demand, it will become increasingly so, with densely populated areas experiencing abundant demand and others in frank demographic decline.”  

Invest in women

However, Hupkau and Ruiz-Valenzuela share some of the UNPF’s optimism. They suggest a series of policy measures in their policy report that they say could benefit both birth rates and the economy. 

“In general, the empirical evidence suggests that policies that make it easier to be a working mother, such as financial incentives in the form of tax credits for working mothers and subsidized or free childcare for younger children, increase women’s labor market tenure and fertility,” they explain. 

“Greater investment in policies that make it easier for mothers to be working women would help reduce the penalization of childbearing and, at the same time, increase the fertility rate.” 

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