Determinants of the Fertility Rates in Ireland and Iceland

Table of Content

1 Introduction

2 Theoretical Conception

3 Country Characteristics
3.1 Ireland
3.2 Iceland

4 Structural Analysis

5 Implications for Policy Makers

6 Conclusion

7 Appendix
7.1 List of possible Influence Factors
7.2 Graphs and Tables

8 References

1 Introduction

This policy brief is based on an analysis of Ireland and Iceland with respect to the causes that lead to their high fertility rates. Since Ireland is considered as a typical male breadwinner model country it is important to investigate the structural and institutional reasons and their underlying mechanisms that encourage child bearing. Iceland, on the other hand, has also an extremely high fertility rate, but contrary to Ireland there is high female labor force participation. The idea behind the comparison presented is that there are significant structural differences in both countries which should lead to different effects, but instead the outcome (in terms of birth rate) is almost identical in both countries.

The upcoming chapter tries to give an overview about existing studies dealing with the decline in fertility rate. This overview is followed by a general idea about the underlying theoretical conception of the presented comparison. It also will portray the categories in which the independent variables can be divided. In the following chapter the characteristics of a couple of influences of the countries of Ireland and Iceland will be described in detail. These characteristics will be compared and analyzed in Chapter 4, which also tries to give some hypotheses about how their influence affects the fertility rate. Chapter 5 finally will infer some implications for the policy makers in the investigated countries from the compiled hypotheses.

2 Theoretical Conception

The topic of the fertility rate and its decline in modern welfare states and industrial nations has been examined in many different studies, which have a focus on different aspects and influence factors as explanation for the decline in fertility or the variation across nations. The most popular approaches view changes in the structure of the economy (OECD 2005), changes of attitudes and gender roles (OECD 2005, Rindfuss et al. 2003, Caldwell & Schindlmayr 2003, Chesnais 1998), the increasing instability of the family (Rindfuss et al. 2003, DiPrete et al. 2003) or the growing wealth in industrialized countries (OECD 2005, Chesnais 1998) as constitutive influence factors for the decline of the fertility rate. But these macro level influences aren’t the only ones to explain the modern decrease of the birth rate. There are also some micro level approaches, which regard the increasing involvement of women in education (OECD 2005, Rindfuss et al. 2003), the steady rise in female labor participation and income (OECD 2005, Rindfuss et al. 2003, DiPrete et al. 2003), unemployment (OECD 2005) or the change of the individual child wish (OECD 2005, Caldwell & Schindlmayr 2003) as crucial determinants of the declining fertility rate.

According to these approaches the following comparison considers the fertility rate as a dependent variable which is affected by a whole set of different factors. These influence factors can be assigned to six broader categories:

- General economic development
- Employment market
- Welfare state
- Family policies
- Demographical conditions
- Individual and societal attitudes

Within each of these categories there are a couple of independent variables (cp. Appendix 8.1) that have influence on the fertility rate. In the context of this paper it would go too far to cover every single possible influence factor and its effect on the fertility rate. Thus only a small selection of influences will be investigated and compared for the two countries of Ireland and Iceland here.^[1]

3 Country Characteristics

3.1 Ireland

To examine reasons for the high fertility rate (cp. Appendix, Graph 1) in Ireland it is advisable to first have a look at the general economic situation of the country. At the beginning of the 20th century, Ireland was among the poorest European countries. Between 1845 and 1849 there has been the Great Famine in which 1.5 million Irishmen died of hunger. Since that time the country has undergone a lot of changes: after attaining the political independence in 1921 Ireland managed to a time of economic growth and is nowadays among the richest nations in the EU and worldwide. In 2004 its GDP per capita was $35,767 (OECD 2006). Graph 4 (see Appendix) shows that the GDP per capita for Ireland was in 1990 on a level lower than the OECD average, but then developed and meantime is on a level that is way beyond the OECD average. In Graph 3 (see Appendix) can be seen that the growth of the GDP has a quite erratic developing but is constantly on a higher level than the OECD total.

But despite its wealth the country has to deal with a couple of problems. It is barely imaginable that such a rich country has serious trouble with poverty, especially child poverty. But fact is that “Ireland ranks 16th out of 17 countries in the industrialized world. Only the USA has a higher percentage of its population living in poverty (UN Human Development Report 1998)”^[2]. A possible explanation for the unimproved poverty could be that the economy hasn’t generated any noticeable outcome for the society yet because all earned money gets reinvestigated directly. If this was the case, then the poverty risk should significantly decrease within the next couple of years after the investigations have reached their highest level. Another explanation would be that there exists a high social inequality that causes the poverty. In Graph 5 (see Appendix) the public social expenditure is displayed as percentage of the GDP. It is obvious that Ireland has continuously been under the OECD average and that this gap has been widening throughout the observed time period. If social inequality was the reason for the poverty and Ireland’s social expenditure remains that low, the poverty risk might remain stable or even enhance in the future.

An interesting indicator for the structural position of a country is its employment market situation. Table 1 (see Appendix) shows the employment rates for Ireland from 1994 to 2005. As can be seen the employment rates for both men and women increased significantly over that period. This increase is something higher for women than for men: women’s rate increases half while the men’s rise is only about 10 percentage points. This difference might be traced back to the different starting levels in 1994: the men already started with close to 66% while only 40% of the women participated in the labor market. In the end the difference between the percentage of men and women with an employment decreases.

As Table 2 (see Appendix) points up the participation in part-time work increases. From 1995 to 1996 for both men and women there is a small decline in the rate, followed by an increase slightly over the origin level. From 1997 to 1998 there is a big increase and afterwards the rates remains quite constant. Interesting is that the rates for men and women have a big difference in their levels: In 2004 women’s participation in part-time work is almost 32% while men’s participation didn’t even reach 8%. Here we can see that the above mentioned increase in the employment rate for women has a big effect on part-time labor while this increase for men doesn’t.

The gender differences in the participation in part-time work cannot be found in the unemployment rates. Table 3 (see Appendix) demonstrates that there is no significant difference between men and women. Noteworthy is the extreme fall of the unemployment rates from over 12% in 1995 to 4-5% in 2000 and onwards.

The long term unemployment (cp. Appendix, Table 4) has a similar development: In 1994 it begins to decrease from almost 10% of the working population and stabilizes around 2000 at a level of 1.5%. Men constantly have a higher rate then women have.

One of the most important influence factors for the fertility rate within a country is family policy. The political basic conditions lay the foundation for a successful co-existence of work and family life. In Ireland the regulations allow mothers to leave the job for 34 weeks (Moss & O’Brien 2006). For 22 out of these 34 weeks there is a payment substitution of 70% of the earning (with a minimum of €151.60 and a maximum of €232.40 per week). The remaining 12 weeks are unpaid. At least two weeks must be taken before the birth of the child.

For fathers there are no specific regulations, in Ireland there is no such thing as paternal leave. The only possibility for fathers to take care for their child is the parental leave, which allows every parent to take a break for 14 unpaid weeks per child. Requirement for parental leave is one year of continuous employment with present employer. For the maternal leave there are some other conditions relating to payment of Pay Related Social Insurance (PRSI), for example to have been employed for 39 weeks during which PRSI was paid in the 12 month period before birth of the child (Moss & O’Brien 2006).

As Graph 7 and 8 (see Appendix) demonstrate, the number of births within a marriage is slightly decreasing while the number of births outside of marriage is steeply increasing. This phenomenon indicates a change in the view of marriage in the society.

3.2 Iceland

In contrast to most other western nations Iceland’s population has continuously been rising throughout the last years. In Graph 2 (see Appendix) the evolutions of the populations of Ireland and Iceland can be compared, but the increase of the Icelandic people isn’t identifiable because of the different population sizes. Graph 6 (see Appendix) is better able to illustrate the growth of the Icelandic population. This is also because of the migration to the island, but mostly this growth can be traced back to the high fertility rate (cp. Appendix, Graph 1) that almost reaches the reproduction level.

Iceland’s GDP per capita in 2004 was $32,590. As Graph 4 (see Appendix) shows that the GDP per capita continuously is above the OECD total level. A different picture emerges when comparing the growth of the GDP (cp. Appendix, Graph 3): Here the Icelandic curve is much more fluctuant than the OECD total curve, in some years it even becomes negative.

When regarding the employment market further differences to Ireland appear. Table 5 (see Appendix) shows the employment rates for Iceland. Due to a lack of data only the years 2003 to 2005 can be observed, so it is not possible to give any further statements about the historical development of these numbers. Nonetheless it is possible to spot the in comparison to Ireland high participation of women in the labor market. Women almost reach the men’s participation: the difference is only about 5%.

A very exceptional picture can be obtained by looking at Table 6 (see Appendix): the participation in part-time work decreases. From 1995 to 1998 the level was quite stable, then a small decline started, and from 2002 to 2003 the percentage of female part-time workers sank from around 45% to ca. 33%. In relation to that decline the deterioration for men was even stronger: their participation reduced from ca. 12% in 2002 to ca. 7% in 2005, which means a reduction of over 40% (the women had only a loss of about 25% in that time span).

When regarding the unemployment rates (cp. Appendix, Table 7) it is clear that Iceland has very low unemployment and the trend still is diminishing: in 1995 the Icelandic unemployment was about 5% for both men and women, while ten years later both rates only were half (2.6%).

[...]

^[1] Note: Due to a lack of data category 6 (individual and societal attitudes) will be left out completely in this paper.

^[2] http://www.sozialarbeit.de/europa/newslett/Dez98/E7.htm (accessed lastly February 19th 2007)