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It happens Interviews

Birth rates are declining and the population is ageing. Did we know about this?

Financial and social inequality and how to protect “public goods”

Interview with Maurizio Franzini

Professor of Economic Policy Sapienza University, in Rome – Director of the Menabò of Ethics and Finance

By December 2020December 17th, 2020No Comments
Photo by Lorenzo De Simone

People in Italy are having ever fewer children and increasingly later in life. When did we start realising this was happening?

The decline in births has been a central issue for the past twenty years but the first signs of it date back to the 1970s. Ever since the 2.70 fertility rate peak recorded in 1964 there has been a clear decline in births that doesn’t balance out the demographics. For now the phenomenon is not very visible because meanwhile life expectancy at birth has increased: overall the population remains stable because, even though less babies are born, on average people live longer. According to the most recent data from the ISTAT (the Italian National Statistical Institute) the average number of children per woman has decreased to 1.29, which is much lower than 2.1, the so-called “replacement rate” that allows the population to reproduce. In 2010 we reached the highest fertility rate of the last decade, which was 1.46. In 2018 there were 440,000 new births compared with the 580,000 ones of 2008- a 140,000 fall from 580,000 is rather significant for such a limited timeframe. According to some estimates the Italian population could decrease by more than 7 millions in the next fifty years. Since the start of the new millennium the immigration flow has been partly correcting the decline in births. However, this effect is beginning to lose efficacy due to the tendency of foreigners to socially homologate and to adopt the lifestyle habits of the country they live in. In 2018 the birth rate among immigrant women dropped to 1.94; it was 2.65 in 2008. Italy is one of the countries with the worst data in Europe. Nevertheless, the decline in births is an issue that almost every well-developed country experiences, most of all the richer Southeast Asian countries, such as South Korea, where the average number of children is close to 1. The birth rates of different African countries instead are very high; Niger, for example, almost reaches 7.

The average number of children per woman has decreased to 1.29, which is much lower than 2.1, the so-called “replacement rate” that allows the population to reproduce.

Could the pandemic overturn these birth rates?

It’s difficult to make predictions but the pandemic might actually widen the gap between rich and poor countries by lowering further the birth rates of rich countries and increasing the birth rates of the poorer ones. Some of the main problems are interrupted distribution chains or shortage/lack of contraceptive pills and condoms, which further penalise developing countries. The pandemic runs the risk of interrupting the provision of the sexual health support services offered to women, particularly in the low and middle-income areas of the world. Another really relevant factor is that numerous migrants end up going back to their countries and this increases the probabilities of women getting pregnant. Wealthy countries instead see many interrupt their fertility treatment and several couples postpone maternity because of the current uncertainty of the times. In the same way as with other pandemics, the period of decline in births might be followed by a slight recovery. However, we don’t know how long the current pandemic will go on for and the nature of the resulting economic crisis generates even further uncertainty, which in turn weighs on couples’ decisions.

The birth rate in the world. Already since the 1950s, births have been declining globally, particularly in the G7 countries. According to estimates by the United Nations, the fertility rate in 2100 will be below the replacement level, the one in which the number of newborns is not enough to replace the generation of parents.
Source: United Nations, World population prospects 2019.

 

What scenario should we expect? What are the short and long term repercussions of the decline in births?

If this phenomenon went over the long term we could reach a point where there won’t be any more Europeans. It’s a catastrophic scenario. However, in the short term we are facing different and urgent issues. If the birth rate slows down and life expectancy increases the so-called dependency ratio- the proportion of people at working age and those who are unemployed- can only get worse. This compromises the ability of the welfare system to physically provide pensions or other services that are dependent on the workers’ contribution. Similarly, the national healthcare system also becomes weaker and less sustainable. Young workers have a negative net return in that they contribute heavily to the healthcare system but use it relatively little, while old people have a positive net return and they increase the demand for healthcare services. The ageing of the population also puts a strain on the entire system of goods and services provision and on the rate of innovation. If the overall workforce decreases then the production capacity of our country is destined to drop until all consumer goods terminate. The risk of this happening isn’t immediate but it’s starting to loom on the horizon. This scenario could be counterbalanced by an increase in productivity of the young workers but unfortunately in Italy this value has been negative for several years. In addition to this there’s also the ability to innovate technologically and organisationally, which is closely linked to young people, as they are the drivers of innovation and the consumers of “new” products. Without young people there is a weaker incentive for innovation; scarce innovation in turn means less productivity. A sort of trap might also happen, where the drop of births and productivity fuel each other: over time a low birth rate tampers productivity growth; reducing productivity causes people to receive less income, which leads to having less children, thus resulting in a more significant drop of births. The claim that Italy might already be in this kind of trap might not be completely unfounded.

The ageing of the population also puts a strain on the entire system of goods and services provision and on the rate of innovation.

Is it feasible to plan ahead in order to avoid having to address the problem when it’s too late? What variables should the saving measures impact?

There are many aspects to this. Firstly, children come with a cost, which has led to the well-known baby bonuses and other similar benefits, but it was demonstrated that these have a very limited impact on women’s fertility. Secondly, there’s a cultural aspect. In high-income countries we are seeing a decline in fertility rate also among wealthier women and not just those who are less financially stable. This could be partly explained by the culture and lifestyle models that got established among middle and upper classes and that people don’t want to put at risk by having a child. This is more likely to happen whenever women themselves are the earners of medium or high incomes. However, for the most part the phenomenon of the decline in births has other explanations. Various studies conducted in Italy, France and other countries identified a gap between the apparent desire for fertility and what actually happens. This means that it’s not just preferences that limit the number of children but there are also “limitations”. I believe that the main limitation is the insecurity of household incomes, which has been significantly increasing in Italy- just like in almost every other European country- in the last decades. It’s not so much about earning however much right now, but it’s about the risk of that income flow being interrupted over the years to come and the risk of losing one’s job following maternity. The direct relationship between having a child and risking one’s job strongly impacts women’s fertility rate and leads to a reduction of the number of pregnancies that women go through during their life.

The decline in births isn’t just a gender inequality issue. It’s also about economic and social inequalities.

The European Institute for Gender Equality highlighted that “The core of the problem in Italy today, is the difficulty to reach a balance between work and parenting”. What’s your take on this?

The decline in births isn’t just a gender inequality issue. It’s also about economic and social inequalities. If the family in question is poor paternity and maternity leaves don’t solve the problem. Society needs to take responsibility for the overall life conditions of households. Another relevant aspect is the increased homogamy, the tendency of the poor to marry the poor and of the rich to marry the rich, or the other way around. This results in a reduced social mobility and the consolidation of social and economic inequalities that in turn impact negatively the decline of births both for poor people, due to the instability and lack of services, and rich people alike, whose life being all about wellbeing tends to lead them away from the idea of family.

If children are a “public good” then society should provide various types of resources and policies.

Did we get to a point of no return or is there still time to act?

France is often referred to as a model to follow for its policies to promote births, even though these were only able to avoid a decline in births. Recent data show that the birth rate in France decreased to 1.9 after reaching almost 2 in 2010. We should face this issue by making interventions on expenses, restrictions and benefits. With this in mind it might be helpful to no longer consider children just as a “private good” for the family but as a “public good” for society, as this needs young people. We need to cover this gap between the public value of births and the exclusively private delegation of the responsibility by creating the conditions to facilitate women who work towards contributing to this public good. Individual and isolated interventions are not enough. There isn’t a single intervention that would solve everything. We need to think about a series of interventions that complement one another. The starting point is that if children are a “public good” then society should provide various types of resources and policies to increase the fertility rate, without weighing too much on single individuals and without penalising excessively those who play this social role.

Ignoring these signs that show “something is already happening” is seriously irresponsible and it’s a failure to observe the precautionary principle.

On one hand we face the issue of the decline in births and on the other we have an increasingly overpopulated planet. How do we find the right balance on a global scale?

The right balance can be reached with a more reasonable allocation of the world population, avoiding a scenario where poor and developing countries have to deal with the enormous pressure of overpopulation and avoiding the opposite happening in rich countries. This requires a coordinated, careful and well-reasoned regulation of migratory flows. We are very behind on this front, starting from the reform of the Dublin Regulation proposed by the European Union in 2016. We live in a time where we become aware of so many explosive issues- that could be anticipated- when it’s already late to take action. The sars-cov-2 pandemic is an example of this. The “World at risk” report by the Global Preparedness Monitoring Board warned, as early as September 2019, about the risk of a pathogen infecting 80 million people. We couldn’t be certain of that threat but we had very strong evidence of it, just like we had evidence of a significant decline in births in some regions of the world and of an increase in migratory flows. Ignoring these signs that show “something is already happening” is seriously irresponsible and it’s a failure to observe the precautionary principle outlined by the Treaty on the Functioning of the European Union. Even though these are uncertain signs, action has to be taken- with some sacrifices too- in order to prevent a worse scenario. We should be reminded about how much less we could be losing now if we had taken that global healthcare emergency preparedness report seriously. What we need right now is ad hoc training and education for the global leadership as it’s still so unfamiliar with preventative action plans.

Written by Laura Tonon

 

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