Total Fertility Rate

Education and the demographic-economic paradox

Europe’s birth-rate has fallen below 2 for the first time – but why is this important and how is it measured?

The European Union as a whole has a total fertility rate of 1.5! The world’s five biggest developed economies – the United States, Japan, Germany, France and Britain – had 350,000 fewer babies in 2012 than in 2008, a drop of nearly 5 per cent, but why is this important?

Total fertility rates [TFR] are closely tied to growth rates for countries which means the TFR trend is emerging as a key indicator of the future economic health of a region a country or an ethenic group – the decline in the pool of potential workers, ages 20 to 64, is potentially signalling trouble ahead. In the Western, so called advanced economies, this labour pool has historically expanded for decades, thanks to the vast generation of baby boomers.

The total fertility rate (TFR),

The TFR, sometimes also called the fertility rate, of a population is the average the number of babies that would be born to a women over the course of their live — this can be expressed for a local area, cultural group, state, regional, even global populations. The TFR is a synthetic rate, not based on the fertility of any real group of women nor is it based on counting up the total number of children actually born over their lifetime. Instead, the TFR is based on the age-specific fertility rates of women in their “child-bearing years”, which in conventional international statistical usage is ages 15–49. In other words, this rate is the number of children a woman would have if she was subject to prevailing fertility rates, and survives throughout all her childbearing years.

The demographic-economic paradox

Developed countries usually have a much lower fertility rate due to greater wealth, education, and urbanization. Mortality rates are low, birth control is understood and easily accessible, and costs of children are often deemed very high because of education, clothing, feeding, and social amenities. With wealth, contraception becomes affordable. The TFR is also affected by Female labour participation rate and longer periods spent in higher education meaning women have children later in life. The result is the demographic-economic paradox.

In undeveloped countries on the other hand, families desire children for their labour and as caregivers for their parents in old age. Fertility rates are also higher due to the lack of access to contraceptives, stricter adherence to traditional religious beliefs, generally lower levels of female education, and lower rates of female employment in industry. The result seems to indicate that in most of the least-developed countries populations will swell, while in most of the developed countries, the population will decline.

Associated with total fertility rate is the concept of replacement rate. The replacement rate is the number of children each woman needs to have to maintain current population levels or what is known as zero population growth for her and her partner. In developed countries, the necessary replacement rate is about 2.1. Since replacement cannot occur if a child does not grow to maturity and have their own offspring, the need for the extra .1 child (a 5% buffer) per woman is due to the potential for death and those who choose or are unable to have children. In less developed countries, the replacement rate is around 2.3 due to higher childhood and adult death rates.

More than 70 countries have a total fertility rate of less than 2! Without immigration or an increase in total fertility rates, all of these countries will have declining populations over the next few decades.

The relationship between fertility and socio-economic development is a subject of debate in social sciences. The main issue of the debate is whether there exists a trade-off relationship between fertility and development. In the developed countries significant factors for low fertility rates surprisingly did not point exclusively to the availability of contraception but indicated the instability of modern partnerships and changes to personal social value structures

The total fertility rate for the world has been declining very rapidly since the 1990s. Some forecasters argue that the effective global fertility will fall below replacement rate in the 2020s leading to a stabilized world population by 2050,

The demographic bonus

As fertility declines, the proportion of children in the population falls and the proportion of the population of working age increases, resulting in a lower dependency ratio (defined as the number of children and older persons per 100 persons of working age). Provided jobs are available for the increasing population of working age, a country can reap the benefits of increased production and lower the costs associated with the decreasing proportion of dependants. This “demographic bonus” can thus contribute significantly to economic growth and poverty reduction.

At what stage does this become a problem?

Fertility rates, whether they are high or low, impact dramatically on economic growth, cultural stability and more. The question is at what stage of either decline or growth they become problematic — and experts don’t always agree but one thing they seem to agree on is that small year-to-year changes don’t make much difference, but a sharp or sustained rise or fall over a decade or more will certainly have long-term consequences for society. It’s the change that creates the shock that concerns governments. Before modern chemical contraception, it took some really bad shock to get to the point of population decline. Gradually declining population sizes might be ideal for the environment and stability, but some observers point out that when the population gets smaller, society becomes less dynamic and competitive. On the other hand, gradually growing populations tend to generate dynamism and economic growth.

Economists are worried because growth is stalling in working-age populations. Their numbers as a share of the total population in many countries is falling. Economists typically like to see this share of total population rise, because it means more people are earning money, expanding the tax base and paying for schools for the young and pensions and health care for the old.

In most settings, women who have several children find it more difficult to work outside the home, thus having fewer opportunities to
 improve their economic and social status and that of their families. Low income households with many children often find it more difficult to get out of poverty than those with less children, and high fertility societies face greater demands for services from their youthful populations.

Conventional wisdom in social sciences has been that developed countries tend to have lower fertility rates while fertility rates in developing nations are high. This suggests that the declining fertility rates are attributed to advances in socio-economic development.

Rapid contraction of the labour force could have a negative impact on any economy, on growth, consumption and on the ability of current generations to pay for entitlements and necessities of the older generations.

The real and present danger

Low fertility rates are a real and present danger for regions like Europe and East Asia. They may soon see their labour forces shrink putting at risk their ability to maintain their economies, pay pensions, handle health care demands and more. But fertility is one factor among many, including the importance of education and whether the infrastructure is healthy. Every generation of children becomes a generation of workers and parents and then a generation of retirees. It is its size relative to the other generations in life’s continuum that really matters.

In the United States, three-quarters of people surveyed by Gallup in 2012 said the main reason couples weren’t having more children was a lack of money or fear of the economy.

One measure of living standards is already signalling trouble: Gross domestic product per capita – the value of goods and services a country produces per person – fell 1 per cent in the top five developed countries from 2008 through 2012, according to the World Bank.

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