In 1950, women in high-income countries had an average of around 2.5 children, whereas today that figure is 1.4. The decline in birth rates stands out as one of the most significant socio-economic shifts of our time, with major consequences: fewer people of working age must support a growing population of retirees, making the welfare state increasingly difficult to finance. The Norwegian government has appointed an expert commission to investigate why birth rates are falling and what measures can be taken. HOWFER (Housing, Wealth, and Fertility in High-income Societies) investigates an explanation that has received relatively little attention in research: the housing market and wealth distribution. Since the 1990s, housing prices have more than doubled relative to income in many high-income countries. Young households live in smaller homes than before, and house price growth has redistributed wealth from prospective buyers to existing owners—in practice, from the young to the old. The question we ask is straightforward: How much of the fall in birth rates can be attributed to rising housing costs and growing wealth inequality?
Fewer Children – and More Without Children
Declining fertility involves two distinct phenomena: families having fewer children than before, and an increasing share of individuals who never become parents. Existing research has largely examined the former, whereas HOWFER places equal emphasis on the latter. Recent data from Norway show that the rise in childlessness is particularly concentrated among those who remain single throughout much of their reproductive years up to age 45, with the increase being most pronounced among men. Childless individuals also exhibit persistently higher saving rates than those with children. To understand overall birth rates, we must therefore also understand why more individuals remain single.
Three Work Packages
House Prices and Fertility. We estimate how house price changes causally affect the decision to have children, explicitly disentangling two distinct mechanisms: an income effect, where higher housing costs make households poorer, and a substitution effect, where rising house prices alter the relative cost of having children compared to other goods. To identify these causal links, we leverage exogenous variation from mortgage lending regulation reforms, lottery winnings, and German rent control regulations. We also examine the reverse directional effect—how having children influences housing choices, spending habits, and labor supply.
Childlessness and Singlehood. We develop a theoretical search-and-matching framework to model how individuals form partnerships and decide to have children, where wealth, income, and career prospects determine one's attractiveness as a co-parent. A central concept is the "fertility-saving motive", where single individuals accumulate wealth to strengthen their position in the matching market. This mechanism can explain both the heightened saving rates observed among childless individuals and the deferral of family formation.
Policy and Long-term Consequences. Building on our empirical findings, we construct structural models to evaluate various policy interventions—such as child allowances, childcare subsidies, housing taxation, and credit regulations—and investigate whether measures that were previously effective have lost efficacy because housing costs have risen so high. Furthermore, we analyze whether the dynamic interaction between house prices and population growth can generate long-lasting "housing-fertility traps" characterized by persistently high house prices and low birth rates.
Norwegian Data Provide Unique Opportunities
The data in Norway represents a unique setting for studying these research questions. Because Norway levies a wealth tax, administrative records provide detailed information on household wealth, housing, and portfolios back to 1967, while the Central Population Registry links every child to both parents. This allows us to track the entire population through education, employment, housing transactions, cohabitation, and childbirth—a capability unavailable in most other countries.
