THEORY OF POPULATION CHANGE: R. A. EASTERLIN AND THE AMERICAN FERTILITY SWING

Transcription

1 Lecture on R. A. Easterlin American Fertility Swing THEORY OF POPULATION CHANGE: R. A. EASTERLIN AND THE AMERICAN FERTILITY SWING 1 Comparison and Contrast of Malthus and Easterlin: Malthus' approach is essentially deductive and in the best tradition of modern Anglo-American economics. It starts with a few basic postulates and generates hypotheses about human behavior of quite great generality; in first essay, at least, we find very little systematic recourse to the data. Easterlin is much more inductive; he takes a long and detailed look at the data and his theory seems to arise from the data. Of course this is to be expected since the data base he is working with is considerably better and it allows a search to develop hypotheses. Yet both men were attempting to do something similar: to explain the causes of population growth and change over time. 2 The Phenomenon to be explained: The massive swing in U.S. fertility from the 1920's onward { Fertility declined during 1920's... reached an all-time low during the period { Next 18 years fertility moved upward... reached a peak in fertility was 75% higher than it had been in mid thirties. { By 1970, however, fertility turned downward and by 1973 had returned all of the way to the previous low and beyond -- U.S. fertility was by then the lowest ever recorded. Such a precipitous rise and fall of American fertility within a mere three decades is unparalleled Easterlin sets himself the task of analyzing this change and predicting future fertility.

2 Lecture on R. A. Easterlin American Fertility Swing Page 2 3 Exposition of Easterlin's analytical theory: Total Fertility Rate of Females Aged 14-49: ,000 3,500 3,000 2,500 2,000 Semi-logarithmic scale Rate per 1,000 women Long Swings: Easterlin building on the work of Kuznets, postulated occurrence Features of these long swings: of long swings year cycles in economic activity-- long range business cycles in the U.S. economy. These long swings make them of interest to demographers. { A swing in growth rate of nonagricultural output is followed with a lag by a swing in addition to the stock of both capital and labor. { Swing is accompanied by a change in the rate of change of unemployment and with a lag by the level of unemployment. { Swings in the growth rate of housing construction tend to accompany the long swing... level of construction rises too, with a lag { Long swings don't seem to take place with the same timing in the farming sector <<what about now... is this true?>>. { The long swings characteristically took the form of an urban development boom. Important: { Long up swings characteristically accompanied in history) by a wave of immigration and internal migration.

3 Lecture on R. A. Easterlin American Fertility Swing Page 3 The role of long swings on demographic variables: 1. In an upswing there is a rise in aggregate demand (due to exogenous or endogenous forces) and a resulting rise in investment levels which has important effects on labor markets in urban centers : (a) Unemployment rate falls (b) "Hours worked" and wages rise (c) Migration from low wage areas, rural areas, overseas, etc., takes place. These labor market changes have further effects: 2. If 1(a) and (b) are the result only of tight labor market conditions, real incomes of urban labor force rise... but housing construction does not rise so much... if there is in-migration, however, wages might not rise so much but the demand for housing, hence investment, rises. 3. New households develop demand for housing, urban services, furnishing, etc.... results in an urban development boom...this boom takes a long time to work off since household formation entails some long term spending commitments which are not easily broken. Get an induced rise in both public and private spending commitments and this induces a rise in the growth of aggregated demand which tends to sustain and prolong the original expansion --- past the standard business cycle. In particular: In upswings marriages increase... migration to cities rises... marital fertility rises. Now, it has been argued that prewar decline in fertility was some sort of a long-term trend; however, Easterlin provides contradictory evidence: There are three demographic groups: Foreign born whites: In 1920's fertility falls drastically accounts for 1/3 of total fertility decline even though they made up only 20.9% of pop.

4 Lecture on R. A. Easterlin American Fertility Swing Page : Fertility dropped by 40% more than double the decline of preceding 40 years (this merely put foreign born fertility on a par with native fertility). Urban native born: : Relatively stable. Native farm pop.: Decline through : Greater than urban pop. Much of the aggregate decline in fertility in U.S. in first part of 20th century due to declining fertility of immigrants (changing mix of south Europeans to north Europeans) and FARM POPULATION. Notes on long swings and long waves: Kondratieff cycle Trend Line Kuznets cycle Kondratieff cycles: Proposed by Nikolai D. Kondratieff ( ?) Extensive studies of price, quantity, & value data from US, UK, France, Germany led Kondratieff to suggest the long waves in economic activity. Kuznets cycles are also long swing in economic activity; however their periods seem to have been shorter than those alleged for the Kondratieff cycles (10-25 years) 4 From baby "shortage" to baby boom : According to Easterlin's reasoning, the U.S. economy was in the trough of a long swing... this was accompanied by excess supply of domestic labor which might have had deleterious effects both on the rate of marriage and upon fertility within marriage. This, coupled with the secular decline in

5 Lecture on R. A. Easterlin American Fertility Swing Page 5 the fertility of the foreign-born and the rural-born population led to the lowest fertility levels ever recorded in the U.S. population. However, the end of WW-II corresponds with the upswing in economic activity... Decline in immigration... real wages rise faster... Immigrants by decade (1,000) ,688 8,795 5,736 4, ,035 2,515 3,322 5 The Postwar Baby Boom: Between 1945 and 1957 the U.S. economy was growing well, recessions were relatively short and mild and personal income grew rapidly. This was due in part to the maintenance of relatively low levels of immigration. (See table above.)

6 Lecture on R. A. Easterlin American Fertility Swing Page 6 per thousand 250 Age-Specific Birth Rate of Females Aged 20-24, Relative Economic Status of Males in their Mid-20's (avg. = 26) * *Relative Economic Status Index calculated as follows. The labor market experience of young men is measured by the average general unemployment rate in the US. during the eight years preceding the fertility measurement (i.e., for 1950, ASBR=190 and the corresponding unemployment figure for young men [not shown] is the average UE rate for the years inclusive). The labor market experience of the young men's fathers is calculated using the average general unemployment rate for a twenty year period ending four years before the fertility observation (e.g., for the previous example it is the 20 years average for the years ). The measure of relative status is the difference of the former scale subtracted from the latter. Moreover, the couples producing children in the 50's were from cohorts that had grown up in the midst of the depression. Easterlin argues that these couples having grown up in modest circumstances had relatively low material aspirations for themselves, apart from the

7 Lecture on R. A. Easterlin American Fertility Swing Page 7 achievement of security... in fact this achievement of security served to reduce their material aspirations... Given that couples had low material aspirations for themselves and that their own labor market experience was, by and large, excellent they were left with untapped resources for use on something: Easterlin argues that the "something" was babies. Recently, Easterlin has expanded his argument to include the fertility decline of the 60's. He argues: 1. The relative economic status of young couples and men in the 60's declined considerably from the mid-1950's. Easterlin measures relative economic status on the basis of recent vs. past labor market experience. He argues on the basis of this calculation (see figure on board) that employment prospects were relatively worse for young men in their mid-20's... especially relative to the experience of their fathers... However, since the younger cohorts benefited from their father's favorable labor market experience their own material consumption standards for themselves are much higher... hence the relatively weak unemployment picture meant a decline in their relative standard of living. Easterlin is postulating two mechanisms operating on fertility: lower expected income (current labor market experience) coupled with higher material aspirations stemming from upbringing.

8 Lecture on R. A. Easterlin American Fertility Swing Page 8 Easterlin thus has presented a theory of inter-generational taste transmission and change. This affects both marital fertility and marriage rates. 2. In the mid-1960's there was a "marriage squeeze" since baby boom females were reaching marriageable age faced with relatively small older cohorts of men from which to find a husband. Easterlin argues that the rise in the proportion of unmarried women in their 20's in the 60's is due to this, but he doesn't rule out taste changes. He argues that "Women's lib" was too late to affect fertility in the 1960's, especially in the fertility of women 15-19, which dropped off substantially, since these women are lower status generally.