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Thursday, August 9, 2007

Latvian Fertility

Well, while we are looking at the economic straights which Latvia is now in, it may also be useful to see how we got to where we are. Basically the Latvian economy is growing very rapidly, in all probability too rapidly even in the best of cases. But Latvia does not have the best of cases. If there were a plentiful and adequate supply of fresh labour, growth rates near the present one might not be unthinkable (remember China's GDP is currently growing at around the 11% annual rate, and India may well soon overtake this - over say a 5 to 10 year window). So why not Latvia? Well you have to look at the fertility and migration situation, that is why not.

Latvian Abroad had a post over the weekend which gave some details of the numbers of Latvians in the UK and Ireland (which must surely be the principal destinations since 2005), while Latvijas Statistika offered us some useful information on Latvian fertility earlier in the week.

But before we get into some of the more recent details, I've compared a simple chart showing live births in Latvia since the late 1980s (and in the process, documented the natural population decline by making a comparison with deaths, as can be seen the crossover point is around 1992).

And before going any further I think it important to point out that, from an economic point of view, it is live births and not the Total Fertility Rate statistic which matters, since these births are what regulate the actual flow of new people into the working age groups. As can be see there was a very dramatic decline after 1987 (ie 20 years ago). The decline steadied after 1999, and the number of births has risen slightly, but it is important to point out here (and even forgetting for the moment about the impact of migration) that the number of births will surely soon start to fall again.

This is principally for two reasons:

In the first place there is the fact that the median age of first birth for Latvian mothers at around 25.5 is still comparatively low by West European standards (in Western Europe the numbers normally are approaching the 30 mark). Let's have a look at a chart from Latvijas Statistika:

So we can see that mean ages at first birth have been steadily rising. This process is known as birth postponement, and produces what is known as a "birth dearth" as women delay having children. This process also produces artificially low readings on period based fertility indicators (like the standard Total Fertility Rate), but this, as I say, is largely irrelevant from an economic point of view, since what we are interested in is how many people will be arriving in the labour market in the years ahead. And as I say, since postponement has only run approximately half its probable course, we should expect more from the "birth dearth effect".

But there is a second reason why births are likely to go down with time rather than up, and this is known as the population momentum effect. If we look at the number of children born in 1999 (just under 20,000), then even assuming that Latvia achieved that magical 2.1 perfect reproduction fertility number, they would only produce 20,000 children, not the old level of 40,000 or so. And we can be pretty sure that these 20,000 children born in 1999 won't do this even under the best of circumstances (which, of course, we aren't) since even being optimistic they are only likely to have completed cohort fertility of somewhere in the 1.5 - 1.7 region if other countries examples are anything to go by. So these 20,000 children will produce say 16,000 or 17,000 children.

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