The Fertility Trap Hypothesis

I am introducing a new thing here on Alpha.Sources with this one and I hope that I (not like some of my previous promises) will able to keep it up because I really think it would add value to the writings here at AS. Consequently, I am going to do what I call 'theoretical moments' which are meant to act as primers on rather narrow theoretical issues in the realm of, my kind of, economics.

I am going to begin within the area of demographics with an account and conceptualization of, in my opinion, one of the most important and interesting theoretical postulates within the field of demographics today. In order to position the idea of the fertility trap we need to think about the demographic transition. Now, it is well known that one of the consequences of the demographic transition is a drop in fertility rates as a country develops economically and enters the final stages of the transition. Yet, what is not well known is the nature and extent of this decline in fertility and crucially we can see now that fertility rates do not stabilize at replacement level (2.1). This brings us to the core of the The Fertility Trap Hypothesis. The hypothesis does not seek to explain why and how far fertility might potentially drop below replacement levels but rather attempts to outline the mechanisms which may serve to keep fertility rates in a perpetual low state once they reach a certain lower limit (1.5) and as such tries to demonstrate how some countries risk entering a trap, as it were, of perpetually depressing population momentum. My impetus for this entry is the recent PAA2007 meeting where a slew of papers and articles on demographics were reviewed and among those an article by Wolfgang Lutz, Vegard Skirbekk and Maria Rita Testa entitled New Empirical Evidence on The Low Fertility Trap Hypothesis (PDF - extended abstract). Reading through the abstract we also get the theoretical foundation (elaborated more in this paper) for the fertility trap hypothesis which consequently consists of three mechanisms; a demographic mechanism (LFT1), a sociological mechanism (LFT2) and an economic mechanism (LFT3). These mechanisms are of course explored in great detail in the sources presented in this entry (see list of references below) and I will then only briefly summarize them here.

  • The first mechanism of the fertility trap hypothesis is coined as the demographic mechanism and essentially it represents the potential effect of a situation where fertility drops consistently below 1.5 live births per woman per year. In essence, the demographic mechanism shows us why y-o-y fluctuations in TFR really mean very little in the general perspective and that a much broader perspective is needed. The demographic mechanism consequently works through the idea of negative population momentum. The main point is that the age distribution of the population acts as an additional variable (i.e. independent) to influence fertility apart from actual realized fertility in that period. As such this mechanism acts independently from current fertility on the basis of past fertility, mortality and migration (Lutz et al 2005). What we consequently need to think about here is that a period of very low fertility exerts a structural damage on the pyramid which affects future fertility from a relative point of view to bring future absolute fertility down even if TFR suddenly (and hypothetically) jumps to replacement levels (Lutz et al. 2005).
  • The second mechanism is derived from sociology and is based on the concept of personal ideal family size which is said to exert influence on total cohort fertility (Lutz et al. 2005). In terms of the actual of ideal family size it is said to lag actual fertility by some margin but more importantly, empirical data suggests that ideal family size is declining in several European countries. In terms of the formal mechanism the ideal family size today is said to be a social norm as a function of previous generations' ideal family size. As such, the process of adapting social norms and learning from generation to generation might work in such a way to accentuate a process of fertility decline because the decrease in ideal family size is socialized from one generation to another (Lutz et al 2005). Of course this could also be somewhat tied together with Becker and Barro's idea of the quantum effect of fertility decline essentially derived from the realms of economics but I will leave that question aside here.
  • The third and last mechanism is derived from economics and more specifically from Easterlin's relative income hypothesis. In essence, Easterlin's relative income hypothesis states that it is not the absolute expected income which is important but moreso the income relative to the expectations formed in the youth. The conceptualization of this mechanism thus assumes that fertility is dependant on the relationship (gap) between by aspirations of income and expected income and as the gap increases we will see both a increase in both the quantum and tempo effect of fertility.

So, in terms of a general introduction of the fertility trap hypothesis this is pretty much what you need to have in your head at a first glance. Moving on to the actual operationalization of these mechanisms we of course need to be more specific. In essence, we could also say that the first mechanism (the demographic) in itself represents the fertility trap and its dynamics whereby the two other mechanisms become explanatory variables in terms of what potentially may sustain and exacerbate this negative demographic momentum. Another thing is of course the idea of a trap below a TFR of 1.5 which is crucial for the understanding the idea of this theory. As such, the threshold of a TFR of 1.5 represents the level where anything below risks causing a cumulative acceleration of the three mechanisms noted which then makes it exactly a trap from which recovery will be very difficult. Turning over to the empirical foundation for this theory of a fertility brings us to the recent contribution linked on this subject presented at the PAA 2007. Let us have a look then at the recent data presented in the paper abstract from Lutz, Skirbekk, and Testa at the PAA 2007. Specifically, we have the very recent evolution of ideal personal family size which is shown in the two figures below based on data (see the abstract) from Southern Europe and France. As we can see the decline might look ever so slight but once we get the figure in percentages it shows that the decline in some countries is pretty hefty given the fact that we are only talking about 5 years. Moreover, note that Italy's personal ideal family size is fast approaching below replacement levels and seeing that this is a lagging factor of actual fertility decline the evidence of a traps seems particular sinister here. Also of course the drop in Spain's ideal family size of about 9% is something to watch.



Regarding the data on Easterlin's relative income hypothesis I will refer to the tables and graphs in Lutz et al's extended abstract. The stylised facts are clear, income for women in their peak child bearing age have declined relative to older age groups which may serve to exacerbate the tempo effect of fertility decline as a function of increased birth postponement (Lutz et al 2007).

I think this was basically it in terms of an intro to the fertility trap hypothesis as it has been conceptualized by Wolfgang Lutz on the basis of and as an elaboration of Peter Macdonald 2005 - Fertility and the State: the efficacy of policy. Finishing off with some general questions and remarks I would like to note the following: 

To what extent is the idea of a fertility trap applicable in a universal sense across socities in general? Traditionally, the idea of a fertility trap has been conceptualized in connection with southern European countries. Having said that the mechanisms on which the fertility trap hypothesis rests seem to be universally valid to be examined across many societal environments.

If the fertility trap really exists, how might a country escape? What follows from this is of course the immediate point that the extent to which the fertility trap hypothesis is true paints a very grim outlook for population dynamics in some countries with no imminent way out of the misery. Of course, a positive demographic shock through immigration as experienced in Spain for example might postpone the effects but given the first mechanism noted above merely postpone the inevitable given the cumulative effects of fertility decline.

Lastly, are the mechanisms valid? In terms of the first one there is little to be argued I think since this is essentially pure arithmetic and as such this effect also occurs at fertility levels above 1.5 but may only exhibit a particular 'trap-like' behavior once fertility is sustained below 1.5. As for the other mechanisms they are of course hypotheses in terms of explanatory variables of total actual fertility and may hold different explanatory power pending on the country of question.

List of References

Lutz, W., V. Skirbekk, M. R. Testa forthcoming (2005) "The Low Fertility Trap Hypothesis"
Vienna yearbook of population research. Vienna: Austrian Academy of Sciences

Lutz, W. and V. Skirbekk. (2005). "Policies Addressing the Tempo Effect in Low Fertility
", Population and Development Review. December: 703-725.

McDonald, P. (2006). “Low Fertility and the State: The Efficacy of Policy”, Population
and Development Review. 32, no. 3 (Sep 06): 485–510

Testa, M. R., and L. Grilli. (2006). The influence of childbearing regional contexts on ideal
family size in Europe
. Population 61(1-2), 109-138.

Lutz, W., V. Skirbekk, M. R. Testa (2007) New Empirical Evidence on The Low Fertility Trap Hypothesis PAA 2007