I love kids, but even I admit that raising a large family in a small home hurts. People who want quiet, privacy, and lots of kids need a big house. And as Econ 101 teaches us, the best way to make large homes affordable is to allow the construction industry to build freely. In theory, then, one of the many benefits of housing deregulation is to increase fertility. Deregulation leads to low prices which leads to ample living space which leads to many kids.
The few empirical papers on this topic fit the theory: High housing prices cause low fertility. Most relevant for we deregulation enthusiasts is Shoag and Russell (2018, One Hundred Years of Zoning and the Future of Cities) which finds “a significant negative relationship between land use restrictions and fertility rates across all measures and geographies.”
Still, since no paper is that good, there’s room for doubt. What about the contrary intuition that reducing housing prices will lead to more urban living, which will in turn suppress fertility by prolonging youthful hedonism?
While this scenario is worth pondering, this is a classic case of “compared to what?” If young people can’t afford to live in a trendy downtown apartment, their next-best housing option might be a single-family home in the suburbs. Living in Italy, though, it’s hard to ignore a very different possibility: Living with your parents… decade after decade. Americans call this “living in your parents’ basement,” though having your own basement is quite luxurious compared to remaining in your childhood bedroom into your thirties.
So what? Well, low as apartment fertility is, living-with-your-parents fertility is probably even lower. Living with your parents isn’t just unromantic; it is anti-romantic. Even if you convince someone to move under your parents’ roof, who wants to start a family under such conditions?
Is this issue really quantitatively important? Absolutely. Check out this map, courtesy of Amazing Maps:
Perusing this map, Richard Hanania remarks: “Looks like a TFR map. Living with parents as an adult bad for romantic life.” This roughly checks out:
In Build, Baby, Build, I argue that housing deregulation is a genuine “panacea policy.” Deregulating housing won’t just solve the housing problem. It will make major dents in almost every widely-lamented social problem. Smart money says that low fertility is one of these problems. If you want more babies, you’ve got to make parenting easier. Getting people of child-bearing age out of their parents’ basements is an obvious first step.