Basement Fertility
I love kids, but even I admit that raising a large family in a small home hurts. People who want quiet, privacy, and lots of kids need a big house. And as Econ 101 teaches us, the best way to make large homes affordable is to allow the construction industry to build freely. In theory, then, one of the many benefits of housing deregulation is to increase fertility. Deregulation leads to low prices which leads to ample living space which leads to many kids.
The few empirical papers on this topic fit the theory: High housing prices cause low fertility. Most relevant for we deregulation enthusiasts is Shoag and Russell (2018, One Hundred Years of Zoning and the Future of Cities) which finds “a significant negative relationship between land use restrictions and fertility rates across all measures and geographies.”
Still, since no paper is that good, there’s room for doubt. What about the contrary intuition that reducing housing prices will lead to more urban living, which will in turn suppress fertility by prolonging youthful hedonism?
While this scenario is worth pondering, this is a classic case of “compared to what?” If young people can’t afford to live in a trendy downtown apartment, their next-best housing option might be a single-family home in the suburbs. Living in Italy, though, it’s hard to ignore a very different possibility: Living with your parents… decade after decade. Americans call this “living in your parents’ basement,” though having your own basement is quite luxurious compared to remaining in your childhood bedroom into your thirties.
So what? Well, low as apartment fertility is, living-with-your-parents fertility is probably even lower. Living with your parents isn’t just unromantic; it is anti-romantic. Even if you convince someone to move under your parents’ roof, who wants to start a family under such conditions?
Is this issue really quantitatively important? Absolutely. Check out this map, courtesy of Amazing Maps:
Perusing this map, Richard Hanania remarks: “Looks like a TFR map. Living with parents as an adult bad for romantic life.” This roughly checks out:
In Build, Baby, Build, I argue that housing deregulation is a genuine “panacea policy.” Deregulating housing won’t just solve the housing problem. It will make major dents in almost every widely-lamented social problem. Smart money says that low fertility is one of these problems. If you want more babies, you’ve got to make parenting easier. Getting people of child-bearing age out of their parents’ basements is an obvious first step.
A friend who is visiting from LA last night noted that they had stopped and two and his wife got her tubes tied. That he didn't know a single person with more then two children, and lots of people with none. He feels that the generation younger than his is on track for much lower TFR than his generation, and that seems born out in the data. TFR has collapsed rapidly and even fairly recent data is growing obsolete.
My friend is pretty well off, runs his own large business, and his wife is an accomplished Harvard grad. As Elon Musk notes, every conversation like this sounds like the opening scene of Idiocracy. They clearly could have more kids comfortably from an economics/housing perspective, but it would crimp their lifestyle, it's not in keeping with their peer groups social practices, and they have no cultural/religious/philosophical reason to have more kids.
I suppose that lower housing cost, which is harder than people think to achieve, might help on the margin. But it doesn't seem to be driving why people like this aren't having kids.
By contrast, I know a lot of people who have 3+ kids. They have worse financials then my friend, and some have had to deal with children with disabilities (friends we saw on Saturday their oldest had a stroke at birth and some disability on one side of the body, they went on to have two more). A lot more announced pregnancies at the end of last week, perhaps buoyed by Roe v Wade to shout it to the world.
But they are religious, and they belong to a religious peer group that values children.
On the margin I guess lower housing cost might help, but I doubt there is a silver bullet that can really change housing costs that much. My friends would never raise their kids in a bad neighborhood or send them to bad schools, and to a degree housing not being affordable is what keeps out the bad people.
Public policy wise what would help the most, by far, is no strings school vouchers. A lot of these people don't like what they see in public school, but nobody can afford to send 3+ kids to private school. Schooling is a linear expense, and linear expenses kill fertility.
It would also help to clean up the streets and make public life less obviously hostile to their values.
Really though I don't think there is a solution to the fertility crisis beyond a cultural change towards family values. You can try to throw a child tax credit at it but when push comes to shove people need to feel like getting up all night for a screaming infant is what they want to do with their lives.
Those two maps do not look alike at all. Just glancing across the Nordic countries, Norway, Sweden and Finland have essentially the same housing % but range across the middle three of five birth rate categories. Denmark has super low living with parents rates but only second tier TFR.
Italy's kids with parents % is the same as Romania, but their TFRs are at opposite ends of the spectrum. Spain and Chechia are a similar case. Estonia, Latvia, Lithuania, all buck the trend. Large swaths of central Europe have roughly the same TFR but wildly different % of kids living with parents.
I expect that if you actually plotted out the numbers here you would find there is essentially no correlation, or at least a very weak one. Hanania is prone to seeing what he wants to see in numbers.