Brazil: Free Trade & Birth Rates
A 2018 study (The Effects of Trade Exposure on Marriage and Fertility Choices: Evidence from Brazil by Breno Braga) finds that young women in Brazil were less likely to have children in areas more exposed to trade liberalization in the 1990s. The decline in fertility persisted even 20 years later. However, marriage rates did not change significantly in response to the economic shock.
Why it matters
The findings suggest that large economic shocks, like a major trade policy change, can have long-lasting effects on people's fertility decisions, especially by worsening men's job prospects. However, economic conditions alone may lessen the impact of marriage choices as social norms evolve. Understanding these shifts is important as trade continues to expand globally.
By the numbers
Areas with a median level of trade exposure saw a 1.5 percentage point increase in the share of women aged 20-35 with no children in 2000 compared to 1991
In 2010, a median tariff decline was associated with 0.11 fewer children per woman on average
About 20% of the long-term fertility decline can be explained by reduced employment rates for young men
For every median percentage point drop in tariffs, the share of young men working fell 3.8 points in 2000 and 4.4 points in 2010
Young women's employment fell 2.9 points in both periods, but this did not significantly influence fertility
Between the lines
The researchers, led by Breno Braga of the Urban Institute and IZA, used a "causal mediation analysis" to determine how much fertility changes were caused by worsening job opportunities.
Declining male employment was an important factor, accounting for around 20% of the effect on fertility in both 2000 and 2010
Lower employment for women was not a major reason for the changes in fertility decisions, as income and substitution effects balanced out
Marriage and cohabitation rates did not change significantly in trade-exposed areas, suggesting economic shocks affect fertility more than marriage
This contrasts with some evidence from the U.S. linking men's job losses to lower marriage rates
The backstory
In the early 1990s, Brazil rapidly cut import tariffs and exposed its economy to more foreign competition as part of a major unilateral trade liberalization.
This especially impacted male-dominated manufacturing industries, which faced declines of 30 percentage points in some sectors
Employment declined more for men than women in harder-hit regions
For example, a median tariff decline led to 5.1 points lower male manufacturing employment in 2000 and 9.3 points in 2010, with no significant change for women
Input tariffs for agriculture and mining dropped very little compared to apparel and rubber
What to watch
Similar family dynamic patterns emerge in other countries that liberalize trade. Social norms may lead to different fertility and marriage reactions in more conservative societies or where women have less access to contraception. The researchers note Brazil is relatively socially liberal for a developing country.
The bottom line
This study reveals that disruptive trade shocks can ripple beyond the labor market into people's family lives and continue affecting population-level birth rates decades later as major economic shifts disrupt traditional household specialization dynamics. Policymakers should consider these far-reaching human impacts.