Postponement of Family Formation and Public Budget: Another Approach to Very Low Fertility in Spain

Abstract

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.