Low fertility rates: A fiscal policy perspective
Persistently low fertility rates slow the growth of the domestic working-age population and accelerate population ageing, thereby also posing challenges for public finances. A new Working Paper by the Federal Finance Administration analyses the causes of low fertility rates and their implications for the economy and public finances, assesses the influence of family policy measures, and outlines economic and fiscal policy options.
What do low fertility rates mean for the economy and public finances?
Switzerland’s fertility rate is at its lowest level on record. If it remains persistently low, the domestic working-age population will grow more slowly and population ageing will accelerate. Over the long term, this will also affect the economy and increase pressure on public finances. Both government revenues and expenditure will be affected.
What are the causes of low fertility rates?
The causes of low fertility rates are diverse. The literature essentially highlights three main explanations: the financial burden of having children, challenges in reconciling work and family life, and broader social trends.
Do family policy measures influence fertility rates?
Family policy measures can ease the financial burden on families and make it easier to combine work and family life. However, international evidence suggests that their impact on fertility rates is limited and often only temporary.
What economic and fiscal policy options are available?
In view of persistently low fertility rates, economic and fiscal policy must prepare for an ageing society. This requires making better use of the available labour force, enabling labour-market-oriented immigration, and fostering productivity growth. At the same time, structural reforms to ensure sustainable financing of old-age insurance and to contain expenditure growth in the healthcare sector are becoming more important.