Analysis

With Fertility Rising, Israel Is Spared a Demographic Time Bomb

Our fertility rate is much higher than elsewhere in the developed world, and it’s rising

Babies at the Dyada enrichment program for small children, November 2015.
Tomer Appelbaum

Reports emerged last week that China plans to put an end to its 39-year-old limit on how many children a couple can have.

The reason is quite simple: With an aging population and a drastically shrinking workforce, one in three Chinese people will be aged 60 or over by 2050. Three years ago, the government relaxed the rules and allowed couples to have two children instead of one. But China’s birthrate actually dropped by 3.5% last year, with just over 17 million new babies born.

China is not alone. According to a recent article in The Economist, some 40 countries now have shrinking working-age populations, defined as people ages 15 to 64 – up from nine countries in the late 1980s. Along with China, Russia and Spain have recently joined the list.

Fertility rate in OECD countries, number of children per woman

The population decline in much of the developed world has become a critical issue. In 1963, the total fertility rate for women in countries belonging to the Organization for Economic Cooperation and Development was 3.3. By 1995 it had dropped to 1.7, and it has stayed there ever since – below the rate needed to keep the population at the level it is now.

Globally, Europe has “led” the way, with fertility rates heading lower in the ’70s and ’80s. But more recently, the Muslim world has joined it, most notably Iran and Turkey, as have emerging markets like Mexico.

In the United States, the fertility rate fell from 3.7 per woman in 1960 to a low of 1.7 in 1976. But it had climbed back to 2.1 by 1990. It stayed there until the economic crisis of 2008, which saw a sharp drop to 1.8, where it stood in 2016.

While a slower-growing world population will tax resources less, it will have potentially devastating effects on future economic growth as fewer workers are called on to cover the health care and pension costs of a growing elderly population. That has forced many countries to try and reverse the trend.

Germany, for instance, has shown a surprising and sudden reversal in its very low fertility rate. But that has largely been due to high rates of immigration from elsewhere in Europe and from refugees arriving from the Middle East.

The country has budgeted 45 billion euros ($52.3 billion) in 2016 alone, mainly for day care. Another 90 billion euros is allocated for child allowances. If the policies fail, Germany’s population will peak in 2020 and then begin to decline.

However, in a world of fewer babies, Israel stands out for its unusually high fertility rate – which was 3.1 in 2015 and has actually been rising in recent years. However, the conventional view that the high, rising rate is due to ultra-Orthodox and Israeli-Arab women is wrong.

In 2014, the fertility rate among Muslim and Haredi women was 6.9, but it has been dropping overall over the last two decades. For non-Haredi Jewish women, the rate is high compared with their sisters in Europe and North America. For women who define themselves as secular, it was 2.1; 2.6 for traditional women; 3 for traditional-religious women; and 4.2 for Orthodox women. In contrast to the rest of the developed world, the Israeli fertility rate is about the same as it was in the ’60s. And it has been rising in most groups in Israel in recent years.

What makes Israel such an outlier?

In one survey conducted in 2012, many Israelis cited the security situation as encouraging more babies, while others cited social norms and the government’s pro-family policies – among other things a rate of fertility treatments that is 13 times the level in the United States on a per-capita basis. Many experts cite the latter as the reason as well.

Another possible explanation is that Israel didn’t suffer the sharp economic downturn that most of the rest of the developed world did after 2008, with this contributing to demographic optimism.

Fore sure, a family’s financial situation is a factor is deciding how many children they have – but not in the way people intuitively think of it.

The 19th-century social theorist Thomas Malthus had predicted that the world’s production of food would be outpaced by the growth of its population, leading to disaster.

In fact, technology enabled harvests to exceed population growth and the decline in fertility that followed in the next century wasn’t due to poverty or want, but people’s improved economic conditions and higher education.

Although environmentalists may be happy with the trend, economically speaking, an aging population and the disappearance of babies do not augur well for nations.

In relatively young societies, such as in Africa, a high rate of young people means they still enjoy what is called a “demographic bulge” – a group of young people who will enter the workforce in the coming years.

By contrast, in Europe and the United States, the tax burden will fall on a population that is stagnant or shrinking while spending on the elderly population increases.

In this respect, Israel is some kind of miracle. On the other hand, though, it means overcrowding, insufficient infrastructure, an uneven distribution of resources and an increase in the proportion of low-wage workers, which significantly offset our advantages. Planning for the future is the most important thing we need to do.