Policies to subsidize parenting are all the rage these days. The recent COVID relief package included an expanded tax credit that many Democrats want to make permanent. Mitt Romney’s Family Security Act would replace child tax credits with an allowance of up to $4,200 a year per child for young children and $3,000 a year for kids older than 6. The latest proposal comes from Sen. Josh Hawley in the form of a parent tax credit of $6,000 per parent, which would be layered on top of whatever child tax credit emerges from the current debates. Proponents of these policies, left and right, have argued that it has become too expensive to raise a family. As the Hawley announcement puts it, “Over the past several decades it has become increasingly difficult for working- and middle-class parents to afford to raise a family.”
This alleged increase in the cost of raising children, it is feared, will lower fertility. Declining fertility may have costly consequences in the future: fewer children today means fewer innovators down the road and fewer workers taxed to pay for retirees’ senior entitlement benefits. But if lower fertility simply reflects preferences—the desire of women to have fewer children—rather than financial constraints, then we should weigh those preferences heavily against the costs of diminished fertility. The case for government subsidization of parenting, through either a Hawley-style parent credit or child allowances, is also weaker if it turns out that Americans are as likely as in the past to achieve the fertility plans they had when they entered adulthood.
Thanks to data from the Bureau of Labor Statistics, we can compare the success of millennial and late-boomer women in achieving their earlier-expressed fertility plans. BLS has sponsored two “National Longitudinal Survey of Youth” projects, one beginning in 1979 and one in 1997 (NLSY79 and NLSY97). In both cases, subjects have been followed from adolescence on, with data collected every year or two on a range of topics. Early on in both surveys, women were asked about their fertility expectations, and we now know how many children they have had over their lives. For each generation, we can compare how many children women said they expected to have as young adults with the number they had had by their mid-30s. It turns out that millennial women have been no less successful than late-boomer women at achieving their desired fertility. That doesn’t mean they are having as many children, just that they are doing as well at having as many as they want.
First, let’s look at millennials in the NLSY97, which has been tracking men and women who were born between 1980 and 1984 since they were living at home as teens in 1997. The most recent data available are for 2017, when the participants were between the ages of 33 and 37. To keep these analyses consistent with those for the previous survey later, I’m going to drop the 33-year-olds, leaving women born 1980 to 1983.* In 2001, when these women were aged 18 to 21 years old, participants were asked about how many children they ultimately expected to have (or how many more, given that some had already had children). We can compare these forecasts against the number of children they eventually had by age 34 to 37.