When the director mentions the monthly cost during a daycare waitlist meeting, there’s a certain silence. Parents nod, mentally calculate the likelihood of having a second child, and discreetly begin to reconsider. A recent wave of economic research is attempting to quantify that scene, which is taking place in cities from Tucson to Toronto.
The most rigorous of these studies originates from the University of Toronto, where economics PhD candidate Benjamin Couillard developed a model that tracks the relationship between family formation and housing costs across U.S. counties. His conclusions were striking. Roughly 51% of the fertility decline observed between the 2000s and 2010s can be attributed to rising costs since 1990—a figure significant enough to make demographers take notice. The mechanism he describes—financial pressure squeezing out the option of a larger family—is the same one that economists increasingly point to when childcare bills come up. It’s important to note that his research focuses on housing rather than childcare specifically.
It is not an accidental connection. Theodore Cosco, a research fellow at Oxford’s Institute of Population Ageing, has argued that in order to reverse declining birth rates, affordable childcare must be combined with paid time off and stable economic conditions. Cosco views childcare as a component of a larger affordability puzzle rather than a stand-alone solution.
When analyzing Couillard’s work, Jake Krimmel, senior economist at Realtor.com, made a similar observation, pointing out that although the role of housing is becoming more apparent, researchers still need to determine the precise weight that childcare expenses carry in relation to rent. In the same way that Couillard produced a clean, isolated figure for housing, no one has produced one for childcare. However, the directional evidence continues to point in the same direction.
The pattern’s recurrence across data sources is difficult to ignore. The cost of childcare increased by nearly 39 percent during a comparable period, while shelter prices increased by about 34 percent in recent years. These two costs increased concurrently and affected the same young households. A couple facing a four-figure monthly daycare bill is frequently the same couple priced out of a three-bedroom house. In that context, the fertility decision begins to resemble a budgeting exercise with an unsatisfactory conclusion rather than a cultural shift.
The fertility rate in the United States has now fallen to about 1.6 children per woman, far below the 2.1 required to maintain population stability in the absence of immigration. Margaret Anne McConnell and other Harvard public health researchers have warned against assuming financial incentives will solve this, pointing out that nations that offer baby bonuses haven’t seen significant improvements. Instead, structural factors like affordable housing with enough bedrooms and childcare that doesn’t take up half of a person’s income seem to make a difference.
Couillard himself has been cautious not to exaggerate, framing his housing findings as one lever among several, and there is still genuine uncertainty regarding how these costs interact. However, the picture that is emerging is difficult to ignore when combined with the childcare cost data that is accumulating elsewhere. It’s possible that declining birth rates are more related to shrinking wallets than to changing hearts.
