Fewer children are being born in Sweden, and economic conditions may play a larger role than previously assumed. The inquiry A Future with Children, led by Åsa Hansson, Associate Professor of Economics at the Lund University School of Economics and Management (LUSEM), examines how economic conditions affect family formation and long-term economic development. As part of this work, the inquiry publishes a series of reports; the study presented here is the third released so far.
This study is written by Mattias Ossowicki at the Swedish Ministry of Health and Social Affairs and analyses people aged 20–29 and 30–39 and compares their economic development with that of the broader working-age population.
“Young adults, especially those in their twenties, have fallen behind economically,” says Hansson.
“Partly this reflects demographic changes, but it is also linked to policy. Those in employment have benefited from tax reductions, while people on parental leave, students and single parents have seen their relative economic position weaken.”
Higher economic risks for women
Benefits have not kept pace with wage growth, while tax reductions have favoured those in work. At the same time, more young adults are spending longer in higher education, which often means lower incomes during the early stages of adult life.
“For women, having children can involve greater financial risks,” Hansson explains.
“Income and career development may be affected, and the economic safety net – especially for single parents – has weakened. This may lead women to postpone having children.”
Previous reports from the inquiry also highlight how demographic trends influence economic growth. An ageing and shrinking population can slow long-term economic development, meaning family policy may play an increasingly important role.
Although studying can be financially demanding in the short term, higher education generally leads to stronger income development over a lifetime. While the financial return on education appears stable, there is no comparable “child premium”.
Parenthood and careers
Parental leave and caring for sick children can temporarily reduce income, but the longer-term effects on career progression may be even more significant. Research by Olof Ejermo, Professor of Economic History at LUSEM, shows that the birth of a first child can influence researchers’ careers. According to Hansson, similar patterns can be seen across many professions.
Women still take the majority of parental leave and sick-child days, which can affect career development. The situation is particularly difficult for single parents, who must both carry full financial responsibility for the household and take time off work when a child needs care.
Although couples in Sweden form relationships at roughly the same rate as before, more people are choosing not to have children. When they do become parents, they often do so later in life, which may make it harder to have as many children as they would like.
“If children are important for the long-term development of society, then society also needs to provide stronger support systems,” Hansson says.
“In that sense, society needs to step up.”
