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Postponement of Family Formation and Public Budget: An Explanation of Very Low Fertility in Spain

PFM, Vol. 5 No. 1, (2005)

In this article, we develop a new explanation of the extremely low fertility rate in Spain
(a total fertility rate below 1.3) in terms of the influence of the public budget on the
postponement of family formation. We show that this postponement has dramatically
decreased the ‘potential fertility’ of the Spanish population. We interpret the
postponement of family formation as an adaptation to economic uncertainties due to a
distribution of the public budget that favors the older population and goes against new
families and new children. We propose that this distribution of the public budget is
stable because of the electoral incentives provided by the distribution of public
expenditure across the generations. Policy implications of this approach are discussed.

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