WE CAN HAZ BABIEZ? WTF?

It's been a while now since I wrote this article on how Greece's fertility bust, and our unenlightened response to it, helped build our mountain of debt in the 80s and set us on course for the sovereign debt crisis of 2009. I've been thinking a lot about this issue of fertility lately, and I don't like the economics of it. Especially the combination of debt, rising exponsentially, and a population no longer on the increase.

This is how I came across the almost-mystery of the Greek fertility rate. You'd never guess but Greece's fertility rate grew as we entered recession in 2008 and until 2011, when the last data were collected, it remained higher than at any point during the noughties. You can see the data for yourselves here. Fertility rose to levels unseen since 1987 in 2010 - an apparent reversal of a decades-long slowdown in fertility also experienced by most other European countries.

But look more closely (or perhaps, zoom out a little) and you'll find that the reversal really started in 2000, and is reflected elsewhere in Europe. Eurostat explains it thus:

The slight increase in the total fertility rate observed in recent years may, in part, be attributed to a catching-up process following a general pattern of postponing the decision to have children. When women give birth later in life, the total fertility rate tends to decrease at first, before a subsequent recovery.

In particular, zooming in on women's fertility rates by age group in Greece, it becomes obvious that what really happened since the naughties was that the persistent fall in fertility among women in their 20s paused briefly, while fertility rates among women in their 30s and 40s continued to rise. Both of these groups are now roughly as fertile as they were in the 1960s, thought for different reasons. Essentially, the long trend of Greek (and other European) women delaying their first births is slowly grinding to a halt, and we're seeing the demographic equivalent of a dead cat bounce. The effects of the crisis, however, are also observable. Every age group has seen a dip in fertility since 2010, and they are likely to continue to do so.

One thing that's interesting in studying demographics is to see how fertility rose and fell in different regions. Greece's true demographic black hole is Western Macedonia, which managed to lose fertility even in the boom-times, and was among the worst-hit regions during the crisis. Unemployment there is the highest in Greece, at just over 30%, and most worryingly it is a border region, situated between Albania and the FYR of Macedonia. As more of our national politics turns to exploiting nationalism, this region is going to become a testing ground for all manner of extremist and/or clientelist tactics.

On the other hand, Attica, Crete and the South Aegean did fairly well in terms of fertility, and unsurprisingly the islands in question had the lowest unemployment rates in all of Greece as of late 2011 (this is no longer the case), which would explain some of their fertility performance. Attica on the other hand boasts a mega-city, which tends to distort trends.

Unemployment and fertility

We've known for a while that there is a link between unemployment rates and fertility (see here and here). Having a child is a massive personal and financial investment, so the decision depends on people's, especially women's, time and budget constraints. Up until the 80s, this reasoning produced a neat paradigm: the lower the participation rate of women in the labour market, the higher the fertility rate and vice versa. Unemployment, provided it is brief, reduces the opportunity cost of having children.

Then in the 80s unemployment started to grow, and change in nature as well - brief spells of unemployment turned to long-term unemployment that was hard to bounce back from. Women now had an incentive to delay childbirth until they had accumulated enough human capital to overcome the disadvantage of a prolonged period of absence from the labour market. The participation-fertility relationship turned on its head (see right): countries with lower female participation in the labour market also had lower fertility rates.

But there is a further catch. Higher levels of employment regulation, especially in Greece, have tended to protect full-time work at the expense of part time work, old employees at the expense of young, and men at the expense of women. In fact, the bigger the difference between male and female unemployment, the lower the fertility rate (see right).

This relationship holds in Greece, right up until the crisis. You can see for yourselves on the right. But it seems as though something else may have bumped up Greek fertility rates around 2004-ish. I wonder what that might have been? I thought labour regulations might have something to do with it, so I took a look at the EU Labour Reforms database here. The result?

Apparently in 2004 reforms were introduced to allow enterprises to use fixed-term contract workers much more extensively than previously, subject to some (probably too weak) provisions to prevent abuse of rolling contracts. I suspect that, when you look at the fertility chart once again, some of the inflection around 2004 is down to this range of regulations.