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Policy Insights

Can Policies Stall the Fertility Fall?

A Systematic Review of the (Quasi-) Experimental Literature

Close up of pregnant woman counting money

Declining fertility has been met with concern in several advanced economies, not least because it contributes to an ageing workforce and challenges in caring and providing for tomorrow’s elderly. Countries with extensive public support to families also tend to have higher fertility, and a country’s fertility often goes up when family policies become more generous. These observations, in combination with the idea that people have more children when costs of childrearing are lower, have led to influential theories linking policy and fertility. Social scientists have produced a large volume of literature on how policies affect fertility decisions. Results from (quasi)experimental analyses are an important piece of that puzzle. In a recently published review article, Janna Bergsvik (Statistics Norway), Agnes Fauske (University of Oslo) and Rannveig Kaldager Hart (Norwegian Institute of Public Health) provide a systematic discussion of policy effects on fertility since 1970 in Europe, the US, Canada and Australia.

The authors’ bird’s-eye view corroborates that family-friendly policies do contribute to high fertility. Differences in fertility across countries have emerged, at least partly, because of family policies. Although this insight is not new, the synthesised causal evidence that underpins it is. Previous literature reviews suggested that policy effects were mainly temporary but that evidence was limited and more solid evidence was needed. They have now synthesised results based on new developments in empirical causal modelling, concluding that policies may be more important for fertility than previously thought. This conclusion emerges only when we put the most weight on the studies that capture policy reforms plausibly large enough to impact fertility.

In line with previous knowledge, the scholars conclude that the effects of cash transfers are likely transitory. Previous reviews have remained inconclusive on the effects of parental leave, summarizing them as ‘weak,’ ‘mixed’ or ‘not unequivocal’. Contrary to this, they find lasting and substantial effects on fertility both for large reforms of public childcare and parental leave. These two policies go a long way in alleviating the conflict between women’s roles as workers and mothers, and evidence of effects is particularly present from contexts where this conflict presumably was quite high, such as Norway in the 1970s and Central Europe in the 2000s. When implemented together, they allow parents to retain their jobs while they care for their newborn and then go back to paid work when their child is ready to be cared for by others. As such, these policies may both increase fertility by reducing opportunity costs and increasing maternal labour supply. Very long compensated parental leave may, however, cement traditional gender roles and strengthen the ‘glass ceiling’ faced by women in the labour market.

Family policies usually aim to balance several goals, and awareness of population heterogeneity in responses is important for understanding their total impact on society. It is striking that universal transfers seem to have the largest fertility effects among well-off families who need them the least. Earnings compensated parental leaves imply a relatively large redistribution toward higher-earning couples, and this group also sees the most positive effects on fertility. In-kind services, in contrast, do not show the same social pattern of fertility effects. High-quality health services and childcare early in life have long-term positive effects on health, educational attainment and earnings, particularly for children from poorer families. If reducing inequality is a goal, in-kind services such as child and health care are preferable. In practice, this means that cheap health services should be prioritized over cash transfers and improvements in childcare coverage and quality chosen over compensating very long parental leaves.