In most economically advanced countries, fertility rates (number of children per woman) have been on a downward path in the last two decades. This is a concern particularly in Europe, where the ageing process implies that pay-as-you-go pension systems (predominant in the Old Continent) become financially unsustainable. Not all countries in Europe are alike, however: fertility rates are very low along the Southern coasts (in 2007, 1.29 in Italy and Spain, 1.48 in Portugal and 1.55 for Greece) but significantly higher in Northern Europe (1.66 in Belgium and the Netherlands, 1.98 in France), Germany, with 1.40, stands in the middle. Italian is a peculiar case: not only its fertility rate is the lowest in the world, matched only by Spain and Japan, but women labour force participation is very low as well. The female employment rate in Italy is 45.3, against 51.2 in Spain, 57.6 in France, 59.6 in Germany and 66.5 in Finland.
What explains the cross country variation of fertility rates? Do existing explanations help understand why are Italian women generate so few children while working so little? Some of these explanations are popular but unconvincing. The simplest one is per-capita income. That this is not a plausible explanation emerges clearly if one notes that in relatively poor countries, e.g. in Latin America or Asia, fertility rates are comparatively very high. In fact, the international correlation of incomes and fertility appears to be negative, surprisingly leading to the conclusion children are what economists call an “inferior good”. Another hypothesis is the coverage of child care services. While this may apply to Scandinavian countries and France, where high fertility coexists with very advanced and abundant public services for the child, the same does not hold for anglo-saxons countries, relatively poor in family services but where both fertility rates and women labour participation are quite high (U.K. fertility rates is 1.85 and women employment rate is 65.9).
An interesting explanation has been advanced by an Italian demographer, Massimo Livi-Bacci, namely the so-called delay syndrome, meaning a complexion of factors that tend to result in a slow departure of the young from the womb of the family. He notes that Italian young generations tend to postpone all responsibilities (ranging from job and housing to parenthood decisions) that make a person an adult. A few indicators illustrate the syndrome. The percent of unmarried between 20 and 34 years of age co-habiting with their parents is above 60% in Italy: this is the highest percentage among European countries. More than 60% of young Italians between the age of 15 and 24 obtain their source of income from their parents as opposed to 46% in France, 37% in Germany, 20% in the UK. The average young Italian woman starts her first job around the age of 22 and has her first child at 28, against an average French woman who starts her first job at the age of 20 and gives birth for the first time at the age of 25. Obviously a woman who enters late the labour market has more difficulties in finding a job, and similarly a woman that has her first child late has a lower probability of generating again. This process of gradual delay is accelerating in Italy in the last years.
What explains the delay syndrome? In a recent book, Boeri and Galasso argue that Italian parents love so much their own children that they provide a negative externality to other children. In other words Italian parents are so much worried of providing as much chances and resources to their own offsprings, at the detriment of others, that they do not devote enough resources to improving the well-being of future generations collectively (through better education, more open job markets, etc.). In equilibrium this mechanism tends to shift the distribution of resources against the young generation, which ends up depending more and more on their parents. Needless to say, this mechanism can severely worsen the young’s attitude toward the future and to their prospects.
What are the remedies? Incentives that reward achievements early in life can help. For example, in most European countries undergraduate students can take each exam at most a fixed number of times: if they fail the exam longer they are forced to quit the university (unless special health conditions are proven). Such strict rules do not apply in the Italian university system. No surprise that Italian students tend to finish their degree later! Similar incentives could be introduced in the job market. Of course nobody would want to neglect the importance of the experience but, other factors equal, employers should try to favour and reward young generations.