Monday, 30 June 2008

Rich Countries Face Population Decline

I have been reading the New York Times article No Babies? about the falling fertility rate in Europe. In just about all European countries the birthrate is falling way below replacement rate of 2.1 babies per woman. In many southern European countries like Italy and Greece the total fertility rate is about 1.3 babies per woman. Some attribute this to the practice in these southern European countries of kids staying with their parents for a long time: "One, young people in Italy stay with their parents longer than maybe anywhere else. No. 2 is the percentage of children born after the parents turn 40. These factors are related, because if you have a late start, you tend not to have a second child, and especially not a third."

This however is puzzling because many African and Asian extended families have kids staying with their parents for a long and yet in Asia and Africa there is high fertility rate. In Asia, however, fertility rate has been on the decline as income rises, and Japan is the big exception. This leads me to believe that income is the biggest culprit here, not kids living with parents.

Here in Australia fertility rate is quite low at 1.7 or 1.8 babies per woman. Many in their 20s stay at home because of high property prices and high interest rates. The Rudd Government now pays mothers up to $5000 to produce one baby. This I think has virtually no impact on fertility rates. One child costs $250,000 or more. To give a $5000 rebate is barely going to put a dent in the costs of child rearing. The reality is that we live in a materialistic world where most people want status and prestige. If you raise an outstanding child, you might get some prestige, but it's terribly risky and terribly costly. All the tutors and prep schools in the world won't stop your child from becoming a drug user if that is what the child eventually chooses to do.

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