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Capital Comments: Birth Rates Have Been Falling for a Long Time

Americans are having fewer children. Reports this past summer showed that the birth rate dropped in 2020, to 56 births per 1,000 women age 15 to 44. Only 5.6 percent of women in their child-bearing years had babies. Early indications for 2021 showed a further decline.

Birth rates have been dropping for more than a decade. Birth rates peaked in 2007 at 69 per 1,000 women age 15 to 44. The rate had been rising in the decade before that.

Let’s take a longer view. Much longer. The birth rate has been falling most decades for at least 220 years. We have more than two centuries of data, thanks to the U.S. Constitution, which requires a census every 10 years. So we know that in 1800 the birth rate was 278 per 1,000 women age 15 to 44. More than one in four women of child-bearing age had babies. The average woman had 7 children.

The birth rate began to fall right away. In 1810 it was 274. By 1900 it was 130. National reporting of birth certificates made annual data available by 1909, so we know the birth rate hit a low point of 76 during the Depression in 1936.

The baby boom interrupted the downward trend, for a while. The birth rate peaked in 1957 at 123 births per 1,000 women age 15-44. It hadn’t been that high since 1916. But the rise was temporary. The birth rate dropped again in the 1960s, and in 1972 it set a then record low at 73. It bounced around in the high 60s for 30 years before beginning its most recent drop.

One explanation for this long fall in birth rates is economic. The industrial revolution and technological advances increased productivity. People became more skilled and machines became more efficient. The amount of goods and services produced by each worker, each machine, and each acre of land increased. Profits and wages rose.

Why did this affect the number of children that families had?

Agriculture became more productive, so fewer people were needed on the farm to grow the nation’s food. Families moved to cities to work in factories and offices. Fewer children worked on farms, and child labor in factories eventually became illegal. Children no longer earned income for the family. They became less productive and more expensive.

Wages increased for both men and women, so staying home with children cost more in lost pay.  The “opportunity cost” of having children increased, even though rising productivity cut the costs of food and clothing. When something is more expensive, people do less of it.

Industrial revolution, technological advances and rising incomes are powerful long-run reasons why birth rates declined. So, why did this trend reverse in the years after World War II? What caused the baby boom?

Yes, soldiers came home and nature took its course. But the baby boom lasted for 20 years.  Something else was going on.

My favorite explanation of the baby boom recognizes that the parents of the boomers were the children of the Great Depression. Growing up in those dismal times taught them that having children was a big risk. When the economy of the 1950s and 1960s was much better, they took advantage and had more kids.

The baby boom was a two-decade exception to a two-century trend. By the mid-’60s the children of the Depression were near the end of their child-bearing years. The long-run trend toward fewer births returned and has continued to today.

Whether this is a problem or not depends on your point of view. Fewer births mean an older population, which makes Social Security and Medicare more costly. Slower population growth may restrict economic growth. Slower growth in the number of employees makes business expansion harder, and there are fewer incentives to increase production when the number of customers is growing slowly. But slower population growth may also mean less pressure on the world’s resources. This could help head off the worst consequences of climate change.

Changes in birth rates may cause problems or they may have benefits. One thing that is clear from more than two centuries of data: these changes are nothing new.

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