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Is the fertility decline a consequence of the growth of the welfare state? Evidence from historical data

1. Foreword

The demographic structures of many European and Western economies are changing substantially. Low fertility and longer expected lifetimes are behind this fundamental transformation. Both are presumed to have a substantial effect e.g. on fiscal policy. In fact, ageing and fertility decline are currently considered to be the main problems in Europe and other industrialised economies. A report by the European Commission (see Oksanen 2003, p. 11) goes even so far as stating that “the increase in public expenditure is mostly caused by declined fertility and increasing longevity…”
Both ageing and fertility decline are taken as ‘facts of life’, which cannot be affected by any policies. In other words, they are exogenous. Moreover, these changes are usually considered to be ‘problems’, which sounds somewhat surprising. At least an increase in the life-span is usually thought to increase individual’s lifetime utility and well-being. Why is it now a problem?
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