Do surging house prices discourage fertility? Global evidence, 1870–2012

Abstract

This paper examines the relationship between house prices and fertility rates during the global fertility transition. We establish an analytical framework that considers the complementary nature of children and housing, leading to the hypothesis of a negative effect of house prices on fertility when they are highly complementary. We utilize a newly published house prices dataset spanning 1870 to 2012, covering multiple countries, and employ fixed effect and dynamic panel estimations to address identification challenges including unobserved heterogeneity and dynamic effects. Results show that surging house prices discourage fertility, with a ten percent increase in real house prices associated with a reduction of 0.01 to 0.03 births per woman. These effects are comparable to the impact of increased female education. Our findings offer insights into the evolving patterns of global fertility trends, underscoring the role of increased housing costs in shaping demographic changes.