Recessions Bad for Birth Rate

birth rateRecessions are bad for babies ? and not just during the recession, according to new research.

Women who were in their early 20s during the recent recession are likely to have fewer children ? even a decade or more after the economy has recovered, says a study by the Princeton University?s Wilson School, published this week by the National Academy of Sciences.

?This paper provides further evidence of how profoundly recessions and economic cycles alter personal decisions,? said co-author Janet Currie, a professor of economics and public affairs.

Demographers have long known that the birth rate drops when the economy is bad.

But if it were just the immediate impact of recession on their earnings or that of their potential mates, the birth rate would bounce back when the economy recovered.

Not so, say the Princeton researchers.

Fast forwarding to when those young women are 40, we can expect them to have had fewer children than women who came of age in better economic times, the researchers say.

That conclusion is based on studying previous generations of women ? especially the ones that were in their 20s during recessions: Currie and Hannes Schwandt, a postdoctoral research associate, analyzed birth records of 140 million Americans born between 1975 and 2010. During that period there were five recessions.

Currie and Schwandt calculated that for every one-percentage point increase in the unemployment rate that was experienced by women between ages 20 and 24, there were six fewer babies for every 1,000 women.

By the time those women were 40, there were 14.2 fewer conceptions per 1,000 women.

They calculate that the Great Recession will mean an additional 151,082 women who will remain childless at age 40 and a long-term loss of 420,957 conceptions. That is, they say, a 2.4 percent decrease.

But then the why question: That is, it?s easy to see why massive layoffs and epidemics of bankruptcy and foreclosure might persuade lots of people not to get married or not to have children if they do.

But why would the effect be long-term?

The study focused on the women, so researchers say they aren?t sure. But they have a theory: it?s not the just women. It?s the guys, too. Other research has shown that people who enter the labor force during recessions suffer long-term damage to their earnings and wealth.

And that means that potential male mates are less financially secure and look less economically attractive than they would have looked in good times. And combined with women?s own economic insecurities, that might lead to fewer marriages in general, but also to fewer children.

Economists have noted for months that young people have been slow to form ?households,? a lack that undermines the housing market. It is, they speculate, no coincidence that since the recession growth has been sluggish and most wages stagnant.

Source: MCT Information Services