Interpreting Taiwan's Declining Birth Rate

In the 1960s, Taiwan's total fertility rate was close to 6.0 (meaning that the average woman would give birth to six children over her lifetime). In order to prevent a population explosion that would lead to poverty and economic collapse, the ROC government implemented some strict birth-control measures, dispatching health education personnel to convey the messages that "one child isn't too few" and "two children are just right."

At the end of the 1980s, with the fertility rate dramatically falling to below the population replacement level of 2.1, those birth control policies were terminated. Now, some 20 years later, Taiwan hasn't merely avoided a population explosion. Rather, concern has swung in the opposite direction toward an excessively low number of births, sparking fears of an insufficiently large labor force that causes economic contraction, and even talk of "national extinction." How has this happened?

Graph 1: Total fertility rate and total births in Taiwan

Graph 1 offers a clear look at fertility trends in Taiwan. The total number of births fell from 414,000 in 1981, to 310,000-330,000 in the mid 1990s, and then suddenly to below 300,000 in 1998 (271,450). The number of births temporarily went up in 2000 for the Year of the Dragon (305,312), but has since continued to fall.

The total fertility rate in Taiwan likewise started dropping at the beginning of the 1960s. It held steady in the later 1980s in the 1.7-1.8 range, before resuming its decline. In 2009 it reached a new low of 1.02.

The total fertility rate involves looking at the fertility rates of different age groups of women and combining them to create a fertility rate for a single abstract "woman of Taiwan" at a given point in time. Yet the life paths taken by women in Taiwan over the last 20 years have changed greatly. Because more women are seeking advanced degrees or are entering the job market and delaying marriage, many are electing to have children later rather than deciding against having them at all. These generational differences are worth considering when looking at the totals.

The table clearly shows that births to women in the 30-34 and 35-39 age groups have markedly increased, as has the average age of a woman giving birth to her first child. At a time when many young women are waiting to have children and many older women have already had their last child, the statistics are likely to underestimate the number of births that younger women will end up having. When those younger women grow older and become mothers, births may well increase, so that the rate may keep from sliding toward the abyss.

Now let's take a look at the experience of other nations (Graph 2). In addition to Korea, which is sociologically and developmentally on a par with Taiwan, nations in Europe and the Americas also experienced sharp birth declines in and around the 1970s. But in the 1990s the fertility rates in those nations began to bottom out or even to turn up slightly. Are these rebounds caused by women giving birth at a later age? Or are they the result of national social welfare policies? The answer awaits more research.

The ROC government has already introduced a series of policies aimed at boosting the birth rate, but if those policies are to have a real impact, it may be necessary to first gain an understanding about why people previously wanted to have so many children, and why that "demand" for births has lessened today.

With regard to why people elect to have children, the theoretical explanation often goes to "providing security for old age." The basic concept is that children represent a kind of investment or insurance that parents can collect in old age.

It made a lot of sense when Taiwan was still a traditional society. Back then people had fewer methods of saving, and there was no social safety net to reduce the dangers of old age. What's more, the costs of raising children were lower. And in many traditional settings of economic production (such as agricultural villages), children represented a kind of reserve labor force. Children could yield a good "return on investment," so that childbearing was a choice born of self-interest. But with social development, all that has changed, and now the return on investment may well be negative. It's caused a rapid decline in the birth rate.

Another explanation for the falling birth rate describes children as analogous to consumer goods (so that having a child is like buying a car). According to this explanation, parents give birth to children to provide domestic bliss, and they "altruistically" "include the happiness of the child as part of their own happiness."

Under this theory, the opportunity costs-the lost time and income-that parents incur by choosing to have children exert the heaviest drag on the birth rate. The time expended by the mother is the largest single cost. As women have gained status in the job market and increased their incomes, the birth of a child has come to represent a proportionally larger loss of income. Many women are unwilling or unable to set aside their careers, and that's why they're putting off giving birth year after year.

Modern parents often complain that they can't afford children, but it surely isn't the case that people are poorer than in years past. Rather it's that people have greater and greater demands about children as "consumer goods." To meet parents' growing expectations about quality, children have become more expensive, leading to a reduction in demand.

These varying explanations each have some research data to support them. The author has no intention of suggesting which interpretation is best suited to Taiwan. Rather he wishes to remind people that we need more rigorous research into the current situation in Taiwan, so that we can correctly identify the reasons for the declining fertility rate and potential future trends. Only then can we design truly effective public policies.