Some YIMBYs1 have argued that high housing costs dissuade people from having kids. If you live in a cramped flat and spend a third or more of your income on rent, having a child is much less attractive. And that’s true so far as it goes.
But the problem YIMBY is trying to solve is overwhelmingly the distortionary price gradient between desirable cities and everywhere else. If planning rules were liberalised, then people would have more money to spend, including on babies. But it would also make living in a city more attractive, and we know that cities have a strong negative effect on fertility. If the second factor is larger than the first, the net effect on fertility will be negative.
Suppose rent in London falls in half. Many people who were otherwise considering a more suburban lifestyle now move to the city, and become more career-oriented. There are more things to do for fun. They have a smaller living area than they would outside the city, but it’s worth it for the amenities. Both in terms of lifestyle factors and opportunity cost, the cost of having children has gone up, not down.
Japan, the most YIMBY major economy that I know of, famously has very low fertility. TFR there has been rising a bit, but it looks to me like this is because of the modest success of government programs to raise fertility. I don't think Japanese cities have gotten more affordable over the last ~20 years, which is when this fertility gain has been occurring.
I don’t know what the net effect of loosening planning rules is on fertility – but if I had to guess, I would say that it lowers it.
I think that declining fertility is one of these tricky ‘victims of our own success’ problems. The opportunity cost of having children has exploded – there’s never been more interesting stuff to do in a childless life. But improvements in how fun or easy it is to be a parent have been few and far between. This is the natural consequence.
One possibility is that, while a loose planning regime is bad (in equilibrium) for fertility, efficient transport is good. If there is a strong rail network, more couples can move out to the suburban hinterlands to have kids.
Since there are so many factors involved, it’s challenging to isolate causation. What one really ought to do is compare otherwise similar cities that experienced exogenous shocks to housing policy, and look at the subsequent rates of family formation. For example, you could compare cities in which elections were narrowly won or lost on housing issues (like the abolition of certain forms of zoning). The motivating intuition here is that cities in which a candidate won with 51% of the vote versus lost with 49% of the vote will barely be statistically distinguishable on this basis.2 If you could somehow do this in a convincing fashion, you would have a PhD in economics in the bag.
Many thanks to my friends for fruitful conversations about these issues.
Yes In My Back Yard; people who want to significantly loosen restrictions (such as zoning, planning permission, and parking minimums) on who can build what buildings and where.
This is the idea behind a regression discontinuity design.