Md Faiz Yusuf is a guest writer for the Warwick Economics Summit Blog. He is currently studying towards an Economics Degree at Ashoka University.
Researchers have time and again asserted that “a trend in fertility rate” is a signifier of the economic progress of a country, with fertility rates and economic development having a negative relationship associated with each other. Furthermore, when analysing the economic progress of developing countries like Iran and Afghanistan, organizations like the International Monetary Fund have stated that one of the reasons for the decreased growth rates is high fertility rate, which is linked with low labor productivity. Various countries have tried different methods to lower their fertility rates. This has often been seen as a combination of encouraging family planning through contraceptives and awareness amongst its people. Nonetheless, one of the most significant impacts observed in reducing fertility rates has been seen in Iran after the implementation of the 1993 Family Planning Law.
Source: BBC News, “Iran reins in family planning as population ages” (2020)
The reason for the success of Iran’s 1993 Family Planning law is based on two major economic theories. The law encouraged child-spacing of at least three years between two siblings. It has been observed that child-spacing between two consecutive siblings has a positive impact on the future monetary attainments of the older child. Age spacing negates the undesirable effects of birth order on children’s labor market outcomes as greater spacing allows effective allocation of family investment amongst all children. Additionally, it negates the resource dilution where the children do not have to compete for parental resources, thus producing better economic outcomes for the children.
In line with the resource dilution, a greater age-gap between the birth of two consecutive children would be able to provide the parents “breathing room” for investment in the next child. Moreover, according to Zajonc’s Confluence Model in 1976, age-spacing allows better cognitive development of the older sibling which results from its relation with the younger sibling, tutoring in the earlier stage of life, and even acting as a resource contributor after attaining adulthood.
Another reason for the success of Iran’s Family Planning policy is the accessibility to contraceptives to discourage pregnancy in women who were above the age of 35 and below 18. The positive externalities attached to this policy resulted in reducing unwanted pregnancy. A survey taken of the families in Iran in 1999 to 2000 showed that the births described as “definitely unwanted” went down from 19.1% to 17.2%, which is a two-percentage-point difference within just a year.
This is especially rewarding as unwanted pregnancies are one of the most “troubling public health problems” and pose problems on reproductive health. There are high risks attached to the mother and the baby, which range from poor nutrition and unstable family relationships to miscarriage and negligent parental care. These issues have negative economic consequences in terms of labor market outcomes and public health systems along with greater incidence of mental health issues due to financial constraints and discordance in familial relations caused by an unplanned child. The result is also increasingly welcomed as the greater use of contraceptives has also been linked with more progressive outlooks such as raised awareness of family planning, and higher female autonomy and bargaining power within the household.
Nonetheless, education remains the key player in reducing fertility rates. The impact that education has on reducing fertility rates is multi-faceted. Longer duration spent in obtaining education means that women would then be having children later in life. It is supported by the evidence where female labor force participation rate is seen to have a negative impact on fertility rates, in countries other than the Organisation for Economic Co-operation and Development (OECD) nations, an economic organisation consisting of thirty-seven member countries with the largest economies. Hence, education is considered to have a retarding effect on fertility since it delays marriage and parenthood. Moreover, education also exposes parents to contraception, increasingly aiding in the reinforcement of family planning.
It is also theorized that to control fertility rates, a two-child policy can be effective in contrast with a one-child policy. It is seen that the one-child policy implemented by China is harmful to its economy, especially in the long-run, because it results in more risk-averse and less competitive children within the family. It has also been seen to produce an aged population and a skewed sex ratio. On the other hand, two child-policy is able to offset the negative consequences mentioned without causing the detrimental effect of large sibship size on the overall fertility rate.
It is also not to be ignored that the market failures such as inefficiency in the public goods system and negative externalities, such as traffic congestion, can be avoided with low fertility levels. While the infrastructure of public transportation and healthcare in developing countries fails to suffice to the needs of its citizens, reduced levels of childbirths could greatly help developing countries overcome these problems and more. Even though issues such as opposition by religious groups continue to hinder family planning, the fertility rate of a country is recommended to be restricted to at most two children. Otherwise, the result is observed to be exceedingly precarious, both socially and economically.
Md Faiz Yusuf, a Fellow of the Royal Asiatic Society of Great Britain and Ireland, is currently a student at Ashoka University in India. While he is not busy petting cats and listening to his grandmother's stories, he likes penning down his thoughts, which have resulted in four published books, including 'Midnight Sun.' He hopes to further his career in marketing and brand management and would, hence, be joining the ESSEC Business School this year.