Housing price, elderly dependency and fertility behaviour

Sustaining declines in fertility have increasingly become an alarming issue in most of the world economies. Many governments have been making enormous efforts to alleviate such intertwined problems as falling fertility and soaring elderly dependency. What really makes fertility rates fall? Does housing price have a role (as many argue)? Most researchers addressed this issue from a demographic perspective, but have yet to fully unravel the mystery of human fertility behaviour. The paper aims to investigate the novel linkages between birth rate, housing price and elderly dependency, with the case of Hong Kong. It employs two key methods: (i) the Autoregressive Distributed Lag (ARDL) to co-integration procedure and (ii) Granger causality, to disentangle the complicated relationships, long-run and short-run. The empirical results show that a 1 percent increase in housing prices and elderly leads to 0.52% and 1.65% decreases in birth rate respectively. Besides, both housing price and elderly dependency Granger cause birth rate in the long-run. Our findings not only shed light on fertility behaviour, but also provide implications for policy change. That is particularly relevant to those economies whose low fertility situations need to be ameliorated.

► A 1% increase in housing prices leads to 0.52% decreases in birth rate. ► A 1% increase in elderly dependency rate leads to 1.65% decreases in birth rate. ► Both housing price and elderly dependency Granger cause birth rate in the long-run.