IFO paper links modernity to global fertility decline
A new paper from the IFO-Institut argues that modern institutions, rather than capitalism alone, are driving global fertility rates below the replacement level. The authors propose that modernity makes children expensive and childlessness cheap, a trend now visible in low- and middle-income countries.
A 60-page paper from the IFO-Institut argues that global fertility rates have fallen below the replacement level of 2.1 for the first time in history, a trend extending to low- and middle-income countries. The authors propose a 'modernity hypothesis' suggesting that modern societies, characterized by formal institutions, specialized knowledge, and large-scale coordination systems, make children expensive and childlessness cheap. This is not solely driven by capitalism, as fertility rates also dropped in former Warsaw Pact countries like Hungary and Czechoslovakia in the 1960s. The paper uses a factor model based on data from 236 countries since 1950, finding that the common component of fertility decline peaked in 1978, and current declines are driven by country-specific trends, 219 of which are negative with no sign of flattening. The authors argue that traditional economic explanations like opportunity costs and education investment cannot fully explain the global spread and differences in fertility rates. They note that modern institutions like pensions and healthcare replace the economic functions previously provided by children, reducing the social and economic penalty of having no children.