Do women delay family formation in expensive housing markets

Abstract BACKGROUND Recent research by demographers and economists has examined the link between living costs and fertility outcomes. The literature has provided some evidence that high rents, or high housing costs, discourage fertility. OBJECTIVE I re-examine the hypothesis that delayed fertility (age at first birth) is related to the costs of housing measured either as rents or sales prices. METHODS I use data from the American Community Survey for 2006-2008 to construct mean age at first birth for women in a sample of 25 US metropolitan areas stratified by rents and sales prices. The sales prices for those metropolitan areas were from the National Association of Realtors. I use models of both aggregate relationships of mean age at first birth and metropolitan housing cost level measures and individual analyses of mean age and measures of ethnicity, education and labor force participation. RESULTS The effect of being in an expensive housing market is a delay of first births by three to four years, after controlling for education, ethnicity and labor market participation. However, the relatively modest fit of individual models suggest that while the housing market may play a role it is also clear that there is a complex structure to the decision- making around fertility, labor force participation and housing market entry. Overall completed fertility does not appear to be changed. 1. Introduction The average age at which women have their first child has increased steadily in Europe and the United States. Although there is considerable variation from country to country, women are now an average of three to four years older when they have their first child than their mothers were when they first had a child (Martin, 2004). There is also overall decreased completed fertility across most industrial countries. What is behind these changes, and why has the age at which fertility first takes place increased so much in just a few decades? There is a growing body of demographic literature and parallel studies in the economics of the family that has worked to explain these changes (Burch, 1996; Hirschman, 1994; Sweeney, 2002; Dykstra and Wagner, 2007). Recently that literature has gone beyond the arguments about transitions to education, labor force participation and the impact of economic insecurity, to suggest that housing markets themselves are, through the costs of ownership, affecting the timing of pregnancy. It is this question which is at the center of this analysis which considers both the nature of metropolitan structures (Plane, et al 2005) and the nature of housing market costs specifically. The increasing age at first birth and the overall comparatively high ages at which birth occurs for many women is coincident with the new low levels of fertility that are a function of the rapid rise in birth postponement. This change in fertility behavior is seen as the hallmark of the "second demographic transition" (Lesthaeghe and Neels, 2002). It is a transition which reflects increasing levels of education in post-industrial societies, increasing labor force participation by women and, increasingly, a concern about economic uncertainty (Blossfeld and Hofmeister, 2006). We also know that households often want to enter homeownership before starting a family, or at the least to buy within some period of family formation, but this is increasingly difficult in high cost housing markets. The empirical observation that fertility postponement is often higher in large, expensive housing markets in comparison with smaller and less expensive markets led to an interest in the interaction of housing markets and fertility (Haurin, et al 1993). At its simplest, the notion revolved around the possibility that women delayed fertility until the household acquired sufficient assets to buy a first home. Some simple associations provided modest support for that idea, but just how does housing cost influence fertility, if it does, and what are the underlying processes? …