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The relationship between economic factors and the “baby boom” of the 1950s is not as obvious as is the case of the decline of the 1930s, but I believe it is just as strong. The fullest discussion of this relation can be found in the work of Richard Easterlin (1968, 1980), who emphasized the importance of the relative economic position of young men and women. According to Easterlin, the low birth rates of the 1930s meant that relatively few men and women entered the labor market in the 1950s. Those who did found good jobs, had good incomes, and were therefore disposed to marry early and to have many children. Apparently, higher incomes more than offset the fact that the “price” of time (as measured by hourly wages) was also rising.
In 1956 it was suggested that in countries where income is well above subsistence, “the absolute level of income is of little consequence [in explaining fertility], while the direction and rate of change of income is by far the more important factor”. Not only were young people considerable prosperity in the 1950s, but, having grown pin the thirties and forties, they were more prosperous than they had ever expected to be. This relative-income view also helps us under-stand the decline of the 1930s. After all, even during the Depression the level of living in the United States was much higher than it had been fifty years before, and much higher than in most other countries. In terms of absolute income it doesn’t make much sense to say that people couldn’t afford to have children. But in relative terms it does. Measured against aspirational levels formed earlier, many young people in the 1930s felt that their incomes were too low,

The role of the Great Depression in causing a sharp drop in fertility is so well understood and widely accepted as to require little additional discussion. Between 1929 and 1933 real income per capita in the U.S. declined by almost one-third. Widespread unemployment, a disastrous fall in stock prices, and numerous financial failures led many young men and women to postpone marriage and induced those who were married to delay having children or to abandon the idea entirely. The effect of the Depression on many was permanent, as evidenced by the fact that the cohort of women who were born around 1910 (and who entered the major child-bearing ages at the time of the Great Depression) had, on average, fewer children over their lifetimes than did the cohorts that preceded and followed them.

In the nineteenth century D.S. fertility declined steadily at approximately 0.8 percent per annum; there was no twenty-year span when the rate of change departed markedly from this long-term trend. During the twentieth century the average rate of decline has been similar, about 0.9 percent per annum, but the rate of change has been extremely unstable (see Figure 2.1). Between 1925 and 1935 fertility plummeted at the rate of 3.2 percent per annum. From 1935 to 1955 fertility actually rose by 2.1 percent per annum; then between 1955 and 1975 it fell at 2.9 percent per annum. Economic factors appear to have been significant in all these cyclical swings.

The experience of Romania in the 1960s and 1970s provides a dramatic example of how fertility is affected by changes in the cost of averting births. During the first half of the 1960s the Romanian fertility rate was only about 60 per thousand women ages 15 -44, and reached a low of 56 per thousand in 1966. The Romanian authorities became alarmed because the rate was far below that which would sustain a stationary population in the long run (about 70 per thousand). Inasmuch as a high abortion rate seemed to be contributing to the low fertility, they suddenly made abortion illegal.
The immediate effect was astounding. In 1967 the fertility rate almost doubled, to 106 per thousand. In subsequent years, how-ever, the rate began to fall as other ways of averting births were implemented, Within a relatively few years the fertility rate moved back to the 70 – 80 range – still higher than it had been when legal abortion was freely available. Raising the “price” of averting births did have a long-run effect on fertility. That it was the abortion ban which made the difference is substantiated by the fact that fertility in the U.S.S.R., where no such change in abortion occurred, showed relative stability during the very period in which the Romanian rate was undergoing drastic change.

The effect on the demand for children of falling benefits and rising costs has been augmented by a third set of factors: changes in the costs of birth control. Not every couple have exactly the number of children that they ideally would want if that number could be controlled at zero cost. Some parents have fewer than they would like (because of infertility), but historically there have been many more children born than would have been if birth control were costless and perfect. As a result of technological improvements in contraception, weakening or changing religious views that affect the psychic costs of averting birth, and the legalization of abortion, the costs of averting birth have declined substantially in recent years. Most women come closer now than in the past to having the number of children they ideally would want.

Traditionally, one of the largest costs of child-rearing has been the time spent by the mother, A good measure of the alternative cost of this time is what the mother could earn if she held a paying job. Thus, the long-term rise in women’s earnings has increased the “price” of children, and at any given time the price is higher for better-educated women because they have higher potential earnings. Better-educated women tend to have fewer children, and, if husband’s schooling is held constant, the negative effect of wife’s education on fertility is even more pronounced,
In cross-sectional studies at a given point in time, fertility tends to be higher the higher the husband’s education (holding wife’s education constant) because of the positive relation between his education and family income. Over time, however, rising income also raises the “price” of children because expenditures per child are closely tied to the income and living standards of the parents. This rise in “price” may result in a decrease in the number of children demanded, even though total expenditures on children (number times expenditures per child) usually rise as income rises.

Industrialization substantially reduced the economic benefits of children. Economic development shifted the locus of work from the farm to the city and raised the age at which children began work, thus making them less valuable to parents as a source of production and income. Growing opportunities for accumulating savings in banks, securities, and annuities virtually eliminated the need for children as a method of saving. And the expanding role of government in providing retirement benefits, health insurance, unemployment insurance, and other social programs diminished the importance of having one’s own children as a source of insurance later in life, even though society as a whole depends upon future generations to pay the retirement benefits of the preceding ones.
While the economic benefits of children have been decreasing, the costs of raising them have been increasing. Some of this increase is associated with the shift from rural to urban life, a shift that caused more than proportionate increases in the prices of housing and food. However, the prices of some services (adjusted for quality), such as education and medical care, are probably lower in urban than in rural settings. Thus, as the period of child-rearing has lengthened and expenditures for human services have become more important relative to bare necessities, rural birth rates have followed urban rates in their downward course.

Over the long term the general fertility rate (the number of births per thousand women ages 15 _ 44) has moved sharply downward. Between 1800 and 1910 the rate fell by more than half, and between 1910 and 1980 it again fell by half. Most economists believe that this long-term downward trend, which has its counterpart in all economically developed countries, can be explained by three types of changes: a decrease in the benefits to parents from having children, an increase in the costs of having children, and a decrease in the costs of avoiding having children – that is, the costs of birth control.
The benefits of children are many and varied. For most parents children are a source of pride and delight, a link with the future, an object and a source of love and affection. In agricultural societies children are often valued for their contribution to production; in that sense the demand for them is analogous to the demand for farm machinery,
Moreover, in societies that lack banks, insurance companies, and other financial institutions, investment in children is a principal method of providing for the future.

The birth rates of nonhuman species are determined by biological drives and opacities. Humans are different. In most societies there are retie attempts to influence fertility through formal r „r, ?ai controls over sexual practices and age of marriage. Tit •nodern society the decision to have a baby is frequently as de i.! •ate and as calculated as the decision to attend graduate school buy a house, or move to a new state. Differences in fertility among nations, among groups within the same nation, and over time within groups have broad implications for education, health care, labor markets, standards of living— indeed the entire society, The ability to predict changes in fertility would be extremely valuable, but neither economics nor any other discipline has been able to do so consistently in the past. The economic perspective, however, does provide some helpful insights into this crucial
aspect of how we live.

Once a baby is born, the paramount question has traditionally been “Will it survive?” For most of human history the life cycle for many has been extremely brief- birth, followed quickly by death. Under primitive conditions it is not unusual for half of all newborns to die before the age of one, and prior to the Industrial Revolution even so favored a group as Europe’s royalty experienced infant mortality of over 200 per thousand live births. Now the U.S. rate is approaching 10 per thousand and even in families designated as living in poverty the rate is probably under 20. Widespread interest in infant mortality arises not only from its emotional impact but also because it is an indicator of economic and social conditions. The decline in the average rate has been accompanied by a considerable reduction in inequality of infant survival probabilities across groups, except for the black-white differential. The major proximate cause of the race differential and of infant mortality in general is low birth weight-that is, birth weight less than 2,500 grams (five pounds eight ounces), the standard set by the World Health Organization. Many observers ascribe differences in birth weight to income, education, and prenatal care, but as we will see, there are several reasons for doubting these explanations.