Assessing what level of fertility should be considered optimal

Possible alternative criteria for choosing one fertility level over another are assessed. In accordance with earlier studies, the focus is on age dependency as the sole criterion. However, the strong assumption on age dependency is that all individuals of a given age are equal in terms of their economic contribution to society. Additionally, education is introduced as probably the most relevant observable source of population heterogeneity.

The criterion variable is the education-weighted support ratio. Thousands of alternative simulations were performed for different constant levels of fertility, starting from empirically given populations. If education is assumed to present a cost at young age and results in higher productivity during working age, then for most countries the desirable long-term total fertility rate turns out to be well below replacement level. 

Figure 1 shows the results of extensive simulations for the European Union. Under this model the long-term optimal fertility level (assumed to minimize the dependency burden) turns out to be well below replacement-level fertility. This is for a population assumed to be closed to migration and with life expectancy gradually increasing.

Figure 1: Education weighted dependency ratios for different TFR levels and time horizons as simulated for European Union (with 27 members as of 2011).

If migration gains were to be included in the model the optimal fertility level would fall even lower below replacement. The model shows education-weighted dependency ratios in which the working age population in the denominator is weighted by a set of assumed education-specific productivity weights and in the numerator children are weighted by education costs and the elderly by pension costs.

This is done in steps of 0.1 of the TFR (in the TFR range 0.1-6.0 for age- and education-specific population scenarios to 2100 (keeping the 2011 fertility level constant over the entire projection range).

Last edited: 22 May 2014