Low fertility rates: A fiscal policy perspective

Benjamin Lerch, Thomas Brändle and Martin Baur

Working papers from Faculty of Business and Economics - University of Basel

Abstract: Switzerland’s fertility rate fell below 1.3 children per woman in 2024 and has remained well below the replacement level for decades, reflecting a broader trend across advanced economies. This paper discusses the economic and fiscal implications of persistently low fertility, reviews its underlying causes and the extent to which family policy can influence fertility decisions, and presents policy options available for Switzerland. Low fertility slows growth of the domestic working-age population, accelerates population ageing, and reduces long-term economic growth potential. For public finances, it dampens tax revenues and social insurance contributions while increasing age-related expenditure, particularly on pensions and healthcare. The causes of low fertility are multifaceted, including the financial costs of having children, difficulties in reconciling work and family life, and broader changes in social norms and lifestyles. Evidence from OECD countries suggests that family policies can alleviate some constraints, but their effects on fertility are small and often temporary. Coherent and well-coordinated measures supporting families throughout the child-rearing years appear more promising than individual measures. As a sustained reversal of current fertility trends appears unlikely, economic and fiscal policy should focus on adapting to an ageing society by making better use of the domestic labour supply, facilitating labor-market-oriented immigration, and fostering productivity growth. Finally, reforms to strengthen the fiscal sustainability of pension and healthcare systems become even more important.

JEL-codes: H51 H55 J11 J13 (search for similar items in EconPapers)
Date: 2026-10-22
New Economics Papers: this item is included in nep-age and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2026/09

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