Fertility Rate

The fertility rate is a number that describes how many children a woman has on average. For Germany, this figure stood at around 1.35 in 2023. This doesn’t mean that any particular woman has 1.35 children. It is an average across all women in a country, similar to a class average grade. The important comparison is with the value 2.1: from this level upward, a population remains the same size in the long run without immigration. If the number is below this, each generation becomes smaller than the previous one.

Why 2.1 is the decisive threshold

Two children per woman mathematically replace the parents. The additional 0.1 accounts for the fact that not every child reaches adulthood and that slightly more boys than girls are born. This threshold is called the replacement level. Almost all wealthy countries now lie well below it.

The consequences show up with a delay, but then massively. If few children are born today, apprentices and workers will be missing in twenty years. At the same time, many older people are retiring. Because in Germany the contributions of working people directly pay for today’s pensions, this system becomes more thinly staffed. This is the core of the debate about demographic change.

For investors and companies, the number is a long-term guide. It fairly reliably indicates how many people will be looking for housing, buying cars, or needing care in thirty years. South Korea stands at around 0.7 and is thus at the lower end worldwide. Countries in sub-Saharan Africa are sometimes above 4. Such differences shift the economic weights between world regions over the decades.

How statisticians calculate the number

You cannot wait until a generation of women has, at age 50, given birth to all their children. The answer would come decades too late. That’s why a trick is used: only a single calendar year is examined. For every age between 15 and 49, the number of children born to women of that age in that year is counted.

These values are then added up. The result is a kind of model woman who behaves throughout her entire life exactly as all age groups did in that one year. Experts call this measure the total fertility rate. It is a snapshot, not a forecast of actual life courses.

This leads to a common misconception. If women have their children later, the rate initially falls, even though the same number of children are ultimately born. This distortion is called the timing effect. A single year’s value is therefore of little significance. Only the trend over ten or twenty years shows whether fewer children are really being born.

The number in news and politics

The fertility rate regularly appears in economic news. It usually concerns pensions, skilled labor shortages, or immigration. When the Federal Statistical Office publishes new figures, a political discussion about daycare places, parental allowance, or housing costs almost always follows. Real estate prices and school planning also depend on these forecasts.

A second connection is becoming important specifically in the tech industry. When labor becomes scarce, economic pressure to automate tasks increases. Japan, which has had a low rate for decades, is considered a pioneer in care robots and factory automation. Such arguments are heard today as well, when corporations justify investments in artificial intelligence.

When reading such reports, it pays to look closely at the terms used. The fertility rate is not the same as the absolute number of births per year. The latter can even rise if a particularly large number of women of the right age are alive, even though the rate is falling. Anyone who confuses the two can draw opposite conclusions from the same statistic.