No Salary, No Progeny

11 Dec 2017

Economist Alicia Adserà explains some of the ways fertility and employment choices are interrelated. Professor Adserà participated in the Experts Meeting Whither the Child?, which dealt with the issue of low fertility in developed nations.

Alice Adserà is a professor at Princeton University. Last month, taking advantage of a leave of absence in Barcelona, ​​she participated in the inauguration of BEAT, a new economics research institute at the University of Barcelona. She spoke about the economic factors that determine what might seem to be an internal family matter: the desire to have children and how many.

Spain is among the places in the world where motherhood is postponed the longest and is lowest. How is this influenced by the dual labor market we have, with high levels of unemployment among women and young people?

When you look at national fertility polls, for example, those I studied from 1999 to 2006, in which we analyzed why people did not have as many children as they wanted, most of the responses are tied to lack of work and salary. Access to housing comes out in the middle of the rankings, and things we think of as essential, like nursery schools, were far below. Really, the most important factor is having a good salary.

The working hours we have here, which do so little to favor work-family balance, don’t help much.

This is important to mention, because it varies quite a bit according to location. Here it is not easy, and is solved by extracurricular activities, while in most countries children get out of school at 3 pm and mothers have working hours that end at midday. In some well-paid professions, like lawyers and consultants in the US, the hourly wage increases as the total number of hours devoted to work increases. To occupy leadership positions, it is too often necessary to be physically present, and women are usually those that wind up disappearing.

And do these women choose to go into the public sector or in the worst case scenario, to leave the labor market entirely?

In the analysis I did of Spain from 1999 to 2006, women who work in the public sector have the least difference between the number of children they would like to have and the  number they finally do have. But families in which it is the man who works in the public sector also have more children,, not because they earn more but because of the stability that affords.

Why are low fertility rates a global problem?

It is a problem for many reasons. We can’t lose the talents of women, who are increasingly more educated and what’s more have a longer life expectancy., In terms of employmen, it is unsustainable and we aren’t paying attention to the ticking bomb. In a structure with suc han old population, there will be no one to pay pensions. We are getting younger all the time, and the elderly are living longer. In Spain it is much worse because there is more unemployment, the ability to pay pensions is very low, and the piggy-bank no longer exists.

What should be done?

We must face the facts and allow people to create alternative systems of capitalization.

What can we learn from the Nordic countries, which have more children on average and the highest women’s labor market participation?

It is a curious situation, explained in part by the commitment they have made to socialize the family; it might seem a bit exaggerated, but there is much truth to it. The idea has been to greatly expand the public sector and fit both needs together. Many public services were created to support families, particularly at the local level, giving work especially to women. Today, more than half of women work in the public sector, participation in the labor market is quite high, there is job security and they generous maternity leave. However, this can only be done if there is a very productive private sector like there. The downside is that it is limiting women to enter another type of job. It’s hard for them to have very good professional careers.

Is motherhood postponed in times of crisis?

There is a theoretical debate whether fertility is pro-cyclical or countercyclical. Other questions are addressed such as how children cost much more than the expenditures associated with them - like the fact that one of the parents has to forgo a salary in order to take care of the children, that is, the cost is relative to your salary. Thus, the cost of children is higher the better your wages are.  Nobel Prize winner Gary Becker’s model showed that it is precisely when you are not working that is the best time to have children, because the opportunity cost is lower. But the reality is that steadily increasing long term unemployment makes this theory very complex. Having children makes it harder to find a job, so long-term, the household’s income is reduced.

This is a translation of an interview by Anna Pinter that appeared in Catalan in El Punt Avui December 10, 2017.  “Salary is the Biggest Determining Factor in Having Children”