Influences of lending growth and house prices on fertility 1992-2020: Evidence from a panel of OECD countries

This paper examines how housing market conditions affect fertility trends through two mechanisms: house prices (with potentially opposing effects) and household lending growth. While existing research has documented mixed effects of house prices on fertility, we argue that credit availability—reflected in lending growth—is the crucial but overlooked variable that reconciles contradictory findings. Using fertility data from the United Nations and Human Fertility Database combined with international financial data from the Jordà-Schularick-Taylor Macrohistory Database, we estimate pooled and panel models with both aggregate TFR and parity-specific fertility as dependent variables. Our analysis encompasses 18 OECD countries (1994-2020) for aggregate measures and 13 countries (1992-2020) for parity-specific analysis. We find that lending growth is a robust positive determinant of fertility change, particularly for first births, while house price effects vary systematically by parity: negative for first births (affordability barrier) but positive for higher-order births (wealth effect). These patterns are broadly consistent across countries despite different housing market regimes, suggesting that credit availability has become central to how macroeconomic conditions affect fertility in contemporary OECD economies.