Declining Birth Rates in Wealthy Countries: Implications for Global Markets and Investment Strategies
There are several factors contributing to the decline in fertility rates globally. Countries like China and India implemented long-term government policies aimed at reducing birth rates. Experts suggest that various aspects of contemporary life—such as access to birth control, changing marriage patterns, and increased career and educational opportunities for women, along with factors like smartphones—play a significant role in this trend.
Statistical data reveal a clear trend: as economies advance, the number of children decreases. Presently, nearly all developed nations report fertility rates ranging from 1.2 to 1.8 births per woman, significantly below the “replacement level” of 2.1 needed for stable population growth.
Over the past 50 years, profound social and economic transformations have afforded people greater options and the freedom to select them. Historically, restrictive laws on contraception and abortion, along with limitations on women’s property rights, compelled families—especially women—to have more children than they desired.
However, this is not the entire narrative. Global survey data consistently indicates that individuals have fewer children than they express a desire to have. For instance, Gallup polling has shown that since the late 1970s, the ideal number of children per family among Americans has averaged around 2.5, despite an actual fertility rate that has declined substantially. The most frequently cited reason for this disparity is financial constraints.
What causes this paradox? At first glance, it may seem counterintuitive that people claim they cannot afford children in increasingly wealthy countries. Yet, as economies flourish, several key changes emerge.
Rising wages increase the opportunity cost associated with unpaid activities such as parenting. As parents have the potential to earn more income, the sacrifice of time spent on child-rearing becomes steeper. Additionally, parenting has become more labor-intensive due to heightened educational expectations and the emphasis on human capital, which demands more investment of time and effort from parents. Today, in many developed countries, parents dedicate approximately twice as much time to childcare compared to the 1960s.
Social safety nets also introduce significant changes. In less developed nations, children often contribute to family income from a young age and later support their parents in old age. However, wealthier nations tend to impose taxes on working adults to fund benefits for retirees. Consequently, today’s children grow up to support the elderly population at large, leaving individual parents to shoulder the majority of the financial burdens associated with raising kids. This situation puts parents at a financial disadvantage compared to those with fewer or no children.
As a result, in wealthier nations, parenting shifts from being a strategy for financial stability in retirement to becoming a barrier to financial well-being. Even comprehensive welfare services do little to alleviate these costs. Notably, Nordic countries, known for their subsidized childcare and generous maternity leave, still register some of the highest parenting expenses in Europe when factoring in parents’ time and out-of-pocket costs.
It is crucial to recognize that the choice to become a parent is not solely an economic one. Children provide joy and meaning, and the emotional connections formed between parents and their children, as well as among siblings, represent some of life’s most rewarding relationships. Even the most devoted parents face economic realities.
With one or two children, many parents may choose not to have more, prioritizing the best possible lives for the kids they already have. Recent research indicates that over three-fifths of the decline in birth rates is due to people opting to have fewer children, rather than choosing to remain childless.
The Problem or the Cause?
For those advocating a return to traditional gender roles, the declining fertility rates are often cited as evidence that women’s workforce participation is threatening humanity’s future. However, the situation is more nuanced. Claudia Goldin, a Harvard economist and Nobel laureate recognized for her studies on women in the workforce, found that in nations like Japan, South Korea, and Italy, birth rates have plummeted as rapid economic growth allowed more women to join the labor force without a corresponding shift in gender norms. In these countries, while women increased their working hours, men did not equally share household labor, placing a significant double burden on women.
In such contexts, Goldin notes that “women must reduce something,” and that “something” often turns out to be children. In South Korea, for instance, fertility rates have fallen dramatically from an average of six children per woman in the late 1950s to just 0.75 in 2024—the lowest in the world.
In nations where economic growth was more gradual, such as the United States, Denmark, Germany, and the United Kingdom, fertility rates have declined but not to the same extent. These nations have stabilized at around two children per woman for several decades, with declines occurring more recently. Goldin suggests that the slower pace of growth in these countries allowed more time for shifts in gender roles, resulting in a more gradual decrease in birth rates.
Scarcity and Fertility
Many working parents report a persistent feeling of not having enough time or money to accomplish everything, creating a sense of perpetual scarcity. This sensation starkly contrasts with depictions of dystopian societies, such as “The Handmaid’s Tale,” where fertile women become the prized commodity.
Under oppressive regimes, valuable resources often become monopolized by the elite, who designate fertile women as “Handmaids” to ensure procreation. A similar theme is evident in narratives like “Children of Men” and “28 Days Later,” where control over fertile women symbolizes survival.
In reality, however, the relationship between status, scarcity, and parenthood is complex. While larger families can symbolize wealth, having multiple children often complicates the pursuit of other status indicators, such as career achievement or home ownership. More children may hinder parents’ ability to succeed professionally or afford quality education for their kids.
The dynamic observed is not a dystopia, as depicted in Atwood’s narrative, but rather a quiet compromise resulting in steady decline. Families shrink, with two children becoming one, or none.
Special Analysis by Omanet | Navigate Oman’s Market
As fertility rates decline globally alongside economic growth, Oman’s businesses may face a shrinking workforce, impacting productivity and innovation. This creates opportunities for sectors focused on automation and elder care, while investors should consider the need for adaptive policies that support families, aiming to balance work-life commitments to encourage childbirth. Entrepreneurs could leverage this shift by developing services and products that alleviate the financial and time burdens associated with parenting, thereby fostering a more family-friendly environment.
English 
Arabic 
Persian