Thread by @lymanstoneky

Glad to be in @SCMPNews today talking about the recent report Laurie DeRose and I published for @FamStudies :

WORKISM explains why pro-natal policy in Asia seems to be failing. scmp.com/comment/opinio…

The fundamental problem is that while there is not *necessarily* tension between economic growth and stable fertility, there absolutely IS tension between "developmentalist states" and stable fertility (cc @Noahpinion ).

By imposing strict discipline on labor and making extremely large investments in infrastructure and education *beyond some natural rate*, developmentalist states super-charge growth.

But it has a price.

Strict discipline of labor leads to working conditions that are terrible for families in terms of hours, promotion opportunities, and conditions.

Meanwhile, massive educational investments unpaired with massive increases in demand for equally-educated workers (since a lot of the actual economic growth comes from low- and moderate-skilled workers in export-oriented sectors) create perverse competition and wage dynamics.

The wage benefit of a degree in these states is much smaller than in other countries, because there is a massive supply of graduates compared to the actual number of degree-demanding firms.

Because of this oversupply, these countries 1) export skilled labor (i.e. lots of people go to foreign universities or go be doctors in America, etc), and 2) have tournament-style rewards in schooling and work.

This results in the creation of so-called "two-tier labor markets" or alternatively "salaryman" norms: basically, young people are stuck in low quality work with bad wages, no security, and few benefits, and face tournament-style competition for a limited number of secure jobs.

This experience is phenomenally unpleasant for everyone involved, especially children and young adults, and could help explain why stated fertility and marriage intentions in east Asia are so low.

Indeed, many qualitative studies of family preferences in e.g. Taiwan, PRC, and Korea have found young people explicitly name the miserable experience of the educational system, or the competitive pressure of early career, as reasons *not to have children*.

Not, mind you, that having kids would make the *parent* miserable, but that having kids would make *that child* miserable because they'd grow up in the same competitive system.

So this explanation not only explains low fertility *outcomes*, it has the feature of also explaining low marriage and fertility *preferences*.

It also explains why Chinese and Koreans *in America* do NOT have low fertility preferences!

It's not the ethnic background!

It's the developmentalist states!

Note that this is not to say that *all economic development* leads to Asian levels of fertility.

It is widely understood in the development literature that "developmentalist states" are kind of their own thing. You get people talking a lot about Korea, Japan, China, Taiwan, Singapore.... places that adopted conscious export-led-growth strategies.

However, this paradigm of development has become increasingly popular over time and various elements are being adopted fairly widely, especially as China largely seeks to export this developmental (and related political) model.

My argument, then, is that this strategy has a big problem:

It absolutely wrecks the population structure. It drives considerable amounts of out-migration selectively among the most educated, and it pushes fertility to exceptionally low levels.

This is a problem because developmentalist states also engage in "financial repression," which tends to limit the investment and savings options available to households, which in turn leads to lower real rates of return on retirement savings.

This is an issue because the age cohorts in these states are MASSIVELY out of whack implying HUGELY imbalanced retirement systems, which means you've got vast numbers of people aging into retirement with poor savings for it.

Hot tip:

Elder poverty in Japan and Korea (and China!) is WAY above the OECD average, even controlling for background income levels generally.

Observing elder poverty creates more anxiety about the need to save among younger people and BOOM now you're in a low-fertility-trap.

The only way out is for the state to stop engaging in financial repression, adopt a pro-consumption economic approach, and to begin to act as a pro-labor agent. Which is a very cool way of describing "Why the Nordic Model Works," by the way!

BY THE WAY, this is also a convenient explanation for why Communist countries tended to have high birth rates compared to income despite also having extremely progressive family policies re: contraception and abortion!

Perhaps unsurprisingly, birth rates are lower in South Korea than North Korea, lower in South Vietnam than North Vietnam, lower in West Germany than East Germany (Berlin excepted as a weird special case) etc.

Wildly enough, if you compare the Shenzhen hukou-population to Hong Kong Permanent Residents, it's hard to get a good estimate, but Shenzhen with its mega-low TFRs may even beat HK.

The issue is Shenzhen has massive numbers of people who don't have equal legal status or who are "structurally temporary" and so getting a baseline population is tricky.

While Communism still prevailed, birth rates in eastern Europe were quite high!

They fell with the collapse of communism and have not recovered, because the post-Communist regime is less pro-family!

https://twitter.com/sgodofsk/status/1387448449931612160

This is not a *defense of communism* by the way, it's just a convenient "for instance" where we can see that *in the extreme case* it appears to really be true that the market-oriented developmentalist program has particularly large fertility effects.

Because those effects largely relate to the creation of norms, institutions, and even population cohorts that will persist for many decades, the effects can even outlive the formal state policies themselves!