Baby Dilemma

Low fertility among educated women threatens to lower the supply of high-skilled workers.

While the world's population is still growing, there is already a serious shortage of babies in most developed countries. In Singapore, for example, the total fertility rate per woman stands at 1.4 children, far below the 2.1 children needed to replace its 4 million people.

Even more worrisome, the few babies that do get born are disproportionately born to less educated and poorer mothers. In the U.S., for example, among women college graduates born 1960 - 1964, the average number of children born by age 40 is only 1.6. On the other hand, among women high-school dropouts, the equivalent number is 2.6.

There may be other non-economic reasons involved for this disparate birth pattern. But there is no denying that the opportunity cost of having children is much higher for highly educated women than poorly educated women. The upward momentum of wages is thwarted no matter when a high-skilled educated woman has a child (See The Family Gap). For low-skilled women, their wages stay low anyway. There are little benefits in delaying motherhood or reducing the number of babies.

Given that the chance of getting a good education is low for babies born to poorly educated women; this birth pattern bodes ill for the competitiveness of young workers in the developed countries. In an age where even knowledge-based jobs can be easily offshored to countries with cheap labor, developed countries can ill afford to have workers who are less educated than the developing countries to which skilled jobs have been outsourced.

There are of course low-skilled jobs that are location-bound and cannot be easily outsourced to labor-abundant countries. But the oversupply of low-skilled workers for these low-skilled jobs makes it difficult to elevate their wages.