Key Takeaways
- A new paper suggests that rising housing costs since 1990 have been a significant cause of the decline in U.S. births.
- Benjamin Couillard, a researcher at the University of Toronto, argues that increasing the supply of large, family-sized homes could help reverse the trend.
- Economists continue to debate the root causes of falling birth rates, though access to affordable housing may play a major role.
Planning to have fewer children than your parents and grandparents? You’re not alone. In the U.S., the fertility rate has been on the decline over the past few decades, and one researcher argues that the trend results from rising housing costs.
Couillard, an economics PhD candidate at the University of Toronto, argues in a new paper, which is awaiting peer review, that the rising cost of housing since the 1990s is a significant cause of the decline in the birthrate since then.
“If we didn’t have increasing housing costs since 1990, there would have been 13 million more births, which is 11% of the total number of births between 1990 and 2020,” Couillard told Investopedia. “In the last decade, when there was a large drop in the total fertility rate, the decrease would have been 51% smaller.”
In 1990, the total fertility rate was 2.08 births per woman, according to data from the World Bank. By 2023, it had fallen to 1.62. This is below the “replacement level” (2.1 births per woman), which is the fertility rate required to sustain the current population size.
Why does it matter if the fertility rate is falling? A declining fertility rate could strain the economy, reducing the number of workers helping to support retirees through state and federal programs. This includes Social Security, which relies on FICA, a payroll tax collected from American workers, to pay the benefits for current retirees.
For his study, Couillard built a model linking housing choices and family decisions using U.S. Census data from 1990 to 2020. He looked at how different kinds of households—singles, couples, renters, and homeowners—responded to changes in rent and the availability of larger homes. By simulating what fertility rates would have looked like if housing costs had stayed flat since 1990, he estimated that rising rents and home prices led to about 13 million “missing” births.
His model also tested what would happen if larger, family-sized units were built, finding that this could increase birth rates far more than building smaller apartments. That’s why he says that we don’t just need to build more housing, but larger homes.
“Small units do help for affordability and fertility, and policymakers absolutely should take steps to building more small units when opportunities present themselves,” Couillard said. “But alone, this will not have a large effect on achieving demographic sustainability or helping people have as many children as they want: we need to build more units with three or more bedrooms.”
Phillip Levine, an economics professor at Wellesley, declined to comment on Couillard’s paper. But he noted that figuring out the cause of the declining fertility rate has been a challenge for economists.
“There’s lots of explanations that people have put forward in terms of why the birth rate is falling in the United States. For the most part, a lot of them aren’t particularly successful,” Levine said. “So people talk about things like higher costs of having a family—of raising children, housing, and child care. It turns out those don’t work very well as explanations.”
Levine does, however, point out that there is research backing the idea that making home ownership more accessible can boost fertility rates.
What This Means For The Economy
A low fertility rate could spell trouble for programs like Social Security, which depend on a certain ratio of workers to beneficiaries. U.S. policymakers who want to boost fertility rates have promoted interventions like an expanded child tax credit.
“The main reason why fertility is falling is because each successive cohort starts down a path where they have fewer and fewer children than the cohorts that preceded them,” he said. “Home ownership is frequently an event that goes along with having children. If more recent generations of women and families look out and see that home ownership is more difficult, that may alter their life plans.”
