Saturday, December 17, 2005

Wolfgang Lutz and the Low Fertility Trap

Taking as his starting point the proposition that in the two centuries or so which have lapsed since the ending of the earlier Malthusian demographic regime (which occured more or less similtaneuosly with the arrival of the industrial revolution) no homeostatic demographic equilibrium has been achieved, the demographer Wolfgang Lutz has continued to dig away at the fertility issue to the point that he now feels compelled to ask the question whether or not those societies which may be characterised as experiencing low fertility (below TFR 1.5) may not in fact be caught in some kind of low fertility trap.

Lutz defines the basic Idea lying behind his hypothesis as being the following: once fertility falls below a certain level and stays there for sufficient time this can produce a self-reinforcing demographic regime change that is difficult or impossible to reverse. This 'low fertility trap' hypothesis is really based based on the operation of three interacting mechanisms:

1/. A population momentum component. The delay in childbirth produces very low fertility rates which last for decades, during this time there is pyramid-base shrinkage, and new generations arrive composed of much smaller cohorts. This systematically produces less and less children.

2/ An ideas propagation mechanism. This works via the idea of 'ideal family size': young people are increasingly socialized in an environment with few children, and this may result in a lower 'ideal family size' in the subsequent generation, and so on. Recent (2001) Eurobarometer readings from Germany and Austria indicate that young people may now, on average, have a below replacement ideal of family size (slide on page 8). Since preferences and expectations are important here, this can only lead fertility downwards.

3/ A negative economic feedback process due to cohort and other effects (the Easterlin thesis). Lutz, Skirbekk and Testa develop a flow chart model (page 7 of the presentation in the Adobe Acrobat) which attempts to describe this process.

Lutz's idea has its origins in:

(a) the observation that countries which have fallen below fertility his critical level of 1.5 TFR have generally not subsequently 'recovered' in the sense of returning to a level above 1.5. In particular the germ of the idea here comes from the work of the Australian demographer Peter MacDonald (see this paper) who was the first to note that 1.5 TFR seems to mark something of a watershed.

(b) an awareness that whilst most projections and policy were being set by the assumption that there was a likely 'homeostatic' return to near replacement fertility, there is no rigourous theoretical justification for this assumption.

As Lutz et al observe:

"Virtually all population projections for low fertility countries assume end of fertility decline at current cohort level (Eurostat) or increase (UN), while at the same time continued increases of life expectancy are assumed. To be honest: we have no good theory with predictive power. Some “soft” arguments: end of postponement, children make happy, governments will eventually do “something”. But at the same time the basic forces that brought down fertility continue to work, possibly even stronger (value change, globalization,youth unemployment)".

(c) the further observation that government policy has non-linear consequences in this area. This view differs, for example, from that of the Canadian sociologist Anne Gauthier who argues straight and simple that: Public policies have an undeniable effect on families. On the other hand it is close to the work of social network theorists who examine propagation mechansisms for ideas and values across societies. In the words of Ronald Rindfuss and his co-workers:

“Changes in attitudes likely create a feedback mechanism, influencing behavior; and changes in behavior likely create a feedback mechanism influencing attitudes.” (Rindfuss et al. 2004, p. 855)

In the terms of Lutz et al: once the number of children (siblings, friends, children seen in other families, media) experienced during the process of socialization falls below a certain level, their own ideal family size may become lower which in course may result in further declining actual family size and still lower ideals in the subsequent generation.

The idea of negative demographic momentum is closely associated with the other key contribution Lutz has made to our understanding of the "second demographic transition": his idea of a 'birth deficit'. This deficit arises due to the the continuing presence of a fertility tempo effect, wherby the increase in the mean age of childbearing results in a lasting loss of births, and these 'missing' births cause structural damage to the age pyramid.

In the main Lutz bases his economic feedback mechanism on the cohort impact theory of Richard Easterlin and his associated 'relative income hypothesis. According to Easterlin changing cohort size produces either a crowding-out (the baby boom) or a crowding-in (declining fertility) phenomenon. The hypothesis posits that, other things being constant, the economic and social fortunes of a cohort (those born in a given year) tend to vary inversely with the relative size of that cohort, which is itself approximated by the crude birth rate in the period surrounding the cohort's birth. The cohort mechanisms operate mainly through three main social institutions – the family, school and labour market. Diane Macunovich has a good summary of Easterlins ideas and their application to fertility changes in Relative Cohort Size, Source of A Unifying Theory of the Global Fertility Transition.

The operation of this general 'crowding mechanism' means that large birth cohorts face adverse economic and social conditions, higher unemployment, and lower than expected wages, outcomes which are significantly at odds with their material aspirations. As a result, they postpone family formation and have fewer children. This type of cohort analysis is now being applied to the 'greying' phenomenon in the United States as the large 'boom generation' steadily approaches retirement age. On the other hand, the crowding-in syndrome would mean that the reduced cohorts which follow the fertility decline should find work more easy to obtain, and salaries relatively higher. This should lead to rising income expectations, which may be more difficult to sustain as the fiscal burden weighs down on younger generations with the consequence that they continually postpone starting families.

This latter eventuality seems to have relatively little empirical evidence to date to back it up (except, perhaps, very recently in Japan) so should really be treated with some caution.

Macunovich takes the theory and tries to use it to develop a general theory of the whole demographic transition from cohort effects, and I feel that at this level the argument is not convincing. The cohort dimension is however very evident in the US baby-boom phenomenon, and the subsequent fertility reaction, and indeed this is having the consequence that population ageing is being seen very much as a cohort phenomenon in the United States, but this experience is hard to generalise.

Lutz et al do, however, offer another suggestive direction for analysis: low fertiliy leads to the acceleration of societal ageing, this produces cuts in welfare and pension benefits, generates a general pessimism about the future and lowers expectations about future income. The general pessimism, coupled with anticipations of increased life expectancy, can produce increased saving for the future, and this of course can produce a drag on current consumption. The drag on consumption produces a lethargic level of economic growth, and this induces young people to delay having children in order to attempt to maintain current income. This economic chain reaction, especially in the light of what is actually happening in Geramny and Japan, does seem to be one of the possible mechanisms through which the trap - should it in fact exist - might operate.

However, at the end of the day, as Wolfgang Lutz himself emphasises, what we need is more evidence. Perhaps we will find some in the next Eurobarometer survey on family intentions (due June 2006).


Rindfuss, Ronald R, Minja Kim Choe, Larry L. Bumpass, and Noriko O. Tsuya, 2004, Social Networks and Family Change in Japan , American Sociological Review 69 (December 2004): 838-861. Washington, DC: American Sociological Association.

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