When regulation 'kills' the birth rate

American women—and families—have fewer children than they would like to have. Based on this, a study has found that the gap between desire and reality widens in states where there is greater regulation regarding child-rearing and education.

According to a study, American women have, on average, almost one fewer child than they would like. This, known as the fertility gap—the difference between the number of children a woman ideally wants and the actual number—stands at 0.76, nearly one child.

However, a study by City Journal shows that this figure varies considerably depending on the state in question. Thus, in North Dakota, the difference is one-third, while in New Hampshire, Rhode Island and Alaska, it is even more than one child.

"Affordable childcare options": Key to closing the gap

With the aim of determining the causes of these variations—and based on the fact that "affordable childcare options are key for young families"—City Journal sought to ascertain the extent to which there is a direct relationship between increased regulation and the fertility gap.

To do so, it drew on the work of Anna Claire Flowers, assistant professor of economics at the University of Mississippi; Vincent Geloso, assistant professor of economics at George Mason University; Clara Piano, assistant professor of economics at Austin Peay State University; and Lyman Stone, senior researcher and director of the Pro-Birth Initiative at the Institute for Family Studies.

The key, as the City Journal study concludes, lies not in climate or geography, but in something more human: the degree of regulation—and its more or less intrusive nature—regarding child-rearing and education.

"States with more flexible childcare regulation, it turns out, have smaller fertility gaps than states that impose heavier regulatory burdens. After imposing a host of demographic controls, we find that a one-point increase in childcare freedom on a zero-to-ten scale is associated with a reduction in the fertility gap of about 0.025 children. The policy implications are obvious: overzealous childcare regulations are one obstacle keeping Americans from having as many kids as they want."

Cutting regulations would result in clear fertility gap decrease

City Journal cites Vermont as an example, which is the most heavily regulated state: "Imagine that Vermont (the most heavily regulated state) matched the regulatory environment of a middle-scoring state like North Carolina. Our results show the fertility gap would shrink from 0.78 to 0.68 children per woman—a 12.5 percent change—without additional subsidies or cash transfers."

When the sample is limited to women under 35, the results are even more striking. However, results "remain stable for women currently in the workforce, ruling out the possibility that women disconnected from childcare might be driving results."

The study also indicates that the findings "hold up under an 'instrumental-variables' approach designed to address the concern that some unobserved state characteristic other than regulation might be driving both looser rules and higher fertility. A robust childcare market appears to make a big difference in family decisions."

Work-family balance is crucial to fertility decisions

These findings "highlight the way work-family compatibility—the ease with which people achieve their desire for both career and family—influences fertility decisions."

According to the analysis, it is evident that "regulations make it harder to find the right childcare fit." One of the key points is that more regulations governing childcare translate into higher costs for parents.

"Childcare regulations make the service more expensive by tightening staff-to-child ratios, ramping up credentials, or limiting classroom capacity. Worse, they eventually run providers out of the market and limit the range of childcare options available to parents. States with lower scores on the Childcare Regulations Index report a higher percentage of parents expressing difficulty finding childcare and a greater reduction in home-based childcare providers over the past decade, on average."

Reducing regulations does not mean lowering quality or putting children at risk

However, City Journal emphasizes that relaxing or reducing childcare regulations does not mean acting recklessly and putting children at risk in the care of unqualified individuals or those who might endanger their well-being or even their lives.

Although the City Journal study was inconclusive regarding how regulations affect the quality of childcare, "what is known is that tighter regulation increases overhead costs and decreases staff wages, driving many providers, especially in low-income areas, out of business. With more regulatory freedom, childcare providers experience competitive pressure motivating them to provide the best and safest services to families."

Likewise, City Journal highlights that the effect of regulations on fertility differences is particularly concentrated in regulations pertaining to children 18 months and older, "particularly staff-to-child ratios for toddlers and preschoolers."

Staff training requirements also play an important role in determining the availability of childcare services. Regulations governing infant care enjoy greater consensus across states and show no quantifiable relationship with the fertility gap.

Number of children per classroom and educators' academic qualifications

These findings open the door to deregulation. What matters most to women when deciding to expand their families is, for example, the maximum number of children allowed in a classroom—10 (Pennsylvania) or 20 (North Carolina), for example—or whether educators are required to have earned college credits in early childhood education in order to work in this field.

The stricter (or supposedly more protective) the regulations regarding preschool-aged children are, the higher the costs families must bear. Thus, in several states, the cost of a daycare spot for 4-year-olds is as high as that for infant care. City Journal advocates for "relaxing them to match those imposed in less stringent states can reduce costs while keeping children safe."

Added to this are other factors, such as housing costs and professional licensing requirements, which create a perfect storm that often drowns out expectations of motherhood, especially for working families. "To help people have the families they say they want, policymakers need to address how excessive state childcare regulations may be working against that goal," the study concludes.