In recent years, several US states have restricted access to abortions, leading to debate about women’s reproductive rights in America and elsewhere. We wanted to step back from the arguments about rights and morality, and investigate the issue of contraception and terminations from an economic point of view.
British Household Panel Survey (BHPS) data allowed us to do exactly this, by studying fertility across the life-cycle, especially in relation to people’s incomes and savings.
We know from existing research that around half of all pregnancies are unintended, and roughly half of these are terminated. For married and cohabiting women, 20-30% of all children are unintended, and about 30% of unintended pregnancies are terminated. There is also research which shows that fertility falls in times of instability and recession, but before our work there was little which told us about the impact of income risk. That is, how does having a precarious or inadequate income affect people’s use of contraception and decisions on abortion?
Unique data
BHPS is unique compared to other longitudinal surveys because – as well as asking questions about income, savings and demographics – it also asks couples if they intend to have children. This means we can identify unexpected and expected births. (If a couple says they do not expect to have (more) children, but do, we define that child, or those children, as unexpected.)
The data therefore allowed us to create a model of the life-cycle, and to compare people’s expectations for having children with what actually happens, alongside their saving behaviour. To the best of our knowledge, this has not been done before.
Income risk
We found that income risk could be an important factor in fertility. In our model, if we remove income risk, completed fertility – that is, couples having children – goes up by 6-10%. If we take out the cost to women’s careers of having children, completed fertility goes up about 13%. This confirms earlier research which shows that increased income risk could be an important driver of falling birth rates in the US.
Our model also allowed us to dig deeper into these numbers – and this was another element of the work which, to the best of our knowledge, has not been done before. When we removed income risk from the model, around 75% of the increase in the number of children being born is due to a reduced number of abortions.
This makes sense, because having a higher or less precarious income allows young households to lower the amount of precautionary saving they do, and to have more children earlier. The ability to have children declines with age, so unintended pregnancies – and therefore abortions – are more likely when couples are younger. If couples have a steadier income, and want children earlier, there will be fewer abortions.
If we take the career costs of children out of the model, only about 25% of the increase in completed fertility is due to a reduction in abortions. This is because the desire to have children is more important than the timing.
Government policy and fertility
Our results suggest that increased child benefits, improved maternity leave schemes and unemployment benefits all indirectly affect fertility. The first two primarily mitigate the income loss women face when they become mothers, thus increasing the incentive to have children.
The latter, though, reduces income risk, and our results show that policies which do this will reduce the number of abortions. In other words, if governments, in the United States or elsewhere, want to reduce these numbers, policies which give people a higher or steadier income can do that.
Looking ahead
We think future research in this area could look at income uncertainty, income shocks and people’s decisions on abortion. Our study suggests that younger households’ decisions are sensitive to income risk, and that they are more likely to terminate pregnancies because they are mistimed. When people are older, they terminate unwanted pregnancies and their decisions are less sensitive to income risk because they have accumulated greater wealth.
Given the debate over women’s reproductive rights in the US and elsewhere, we would also be interested to see research into the impact of a ban on abortions on people’s health and happiness.
Authors
Mette Ejrnæs
Mette Ejrnæs is Professor of Economics at the University of Copenhagen
Thomas H. Jørgensen
Thomas H. Jørgensen is Associate Professor of Economics at the University of Copenhagen
