Influences of Lending Growth and House Prices on Fertility 1992-2020: Evidence from a Panel of OECD Countries

Bo Malmberg , Stockholm Unversity
Gebrenegus Ghilagaber, Stockholm University

This paper assesses how housing market conditions affect fertility trends through two mechanisms: house prices (with potentially negative or positive effects) and household lending. While favorable credit conditions facilitate housing acquisition and larger families increase housing consumption, lending is also influenced by credit policies and macroeconomic conditions, making the fertility-lending correlation worth exploring. Using fertility data from the United Nations and Human Fertility Database, plus international financial data, we estimate pooled and panel models with TFR and parity-specific fertility as dependent variables. Pooled OLS analysis of 18 OECD countries (1994-2020) shows positive lending growth effects and negative house price effects on TFR changes. Country-specific estimates reveal similar patterns, though house price effects are less consistent. Pooled grouped Poisson regressions for 13 OECD countries (1992-2020) confirm positive lending growth and negative house price effects on first births. However, second and third births show positive house price effects and negative lending effects. Country-specific OLS estimates show positive lending growth effects on first births (significant in 5 of 13 countries) and negative house price effects (significant in 4 of 9 countries with negative estimates). Country-specific Poisson regressions reveal negative house price effects on first births (10 of 13 countries) but positive effects on second and third births (11 and 10 countries, respectively). These findings suggest housing markets are central to fertility-macroeconomic linkages. Rising house prices may explain first birth postponement, particularly in metropolitan areas. Policies increasing affordable family housing supply could reverse declining fertility trends, while credit restrictions may negatively impact fertility.

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 Presented in Session 17. Fertility and Housing