Rising Housing Costs Linked to Declining Birth Rates in Developed Nations

The connection between rising housing costs and declining birth rates has emerged as a pressing concern in many developed countries. A recent study by Benjamin K. Couilliard from the University of Toronto sheds light on how increasing housing expenses may discourage families from having children. The research indicates a significant relationship between housing affordability and fertility rates, revealing a complex interplay that policymakers need to consider.

Couilliard’s study utilizes data from the US Census Bureau to formulate a dynamic model that explores the joint decision-making process regarding housing and fertility. This model accounts for variations in location and house size, addressing some of the limitations found in previous research, which often overlooked these factors. By employing advanced modeling techniques, Couilliard aims to provide a clearer understanding of how housing costs influence family planning decisions.

The findings suggest that the relationship between housing costs and fertility aligns with the predictions of the Becker quantity-quality model. This economic model posits that larger families are more sensitive to changes in costs, meaning that as housing prices increase, families may be less likely to expand. Specifically, the research indicates that since 1990, rising housing costs have resulted in 11% fewer children being born, accounting for nearly 51% of the decline in total fertility rates observed from the 2000s to the 2010s. Moreover, the study highlights a notable decrease of 7 percentage points in the number of young families during the 2010s.

To further explore potential policy implications, Couilliard conducted counterfactual analyses examining the effects of altering housing supply. The results suggest that increasing the availability of larger housing units could have a substantially positive impact on birth rates. Specifically, a supply shift for large units could generate 2.3 times more births than an equivalent cost adjustment for smaller units. This underscores the importance of developing family-friendly housing policies to counteract declining fertility trends.

As countries grapple with low birth rates, understanding the factors influencing family planning becomes increasingly crucial. Couilliard’s research contributes valuable insights to the ongoing discussion about housing affordability and its implications for future generations. By addressing the affordability and availability of housing, policymakers could potentially create an environment that encourages families to grow, thereby mitigating the demographic challenges posed by declining fertility rates.

The study emphasizes the need for comprehensive policies that not only address housing supply but also consider the specific needs of families. As housing costs continue to rise, the choices families make regarding their living situations and the number of children they have will play an essential role in shaping future demographics.