Family policies, childbearing, and economic crisis: The case of Iceland

Background: In the early 2000s, Iceland implemented one of the most gender-equal parental leave systems in the world, and at the same time increased the volume of public childcare. A few years later, in 2008, Iceland experienced a major economic crises that, among other things, lead to cutbacks in governmental spending and decreased support to families with children. Objective: The objective of this study is to provide insight into recent childbearing dynamics in Iceland and how they may be linked to recent social-policy reforms and the intervention of the economic crisis in 2008. Methods: We use official individual longitudinal register data covering the total female population born in Iceland between 1953 and 1997. We analyse the data by means of event history techniques. Results: We find that changes in the standardized birth rates coincide with the emergence of the reformed family-policy package: A declining trend in the age-standardized first-birth rate came to a halt, and the propensity to have a second and a third child increased. After the onset of the crisis, a trend of decreasing first-birth intensities reemerged and, in 2011, a turnaround to declining second- and third-birth rates. Conclusions: The development in the post-2008 period indicates that even in the most gender-equal settings, the gender balance in family care is still vulnerable, and that family policies cannot compensate in full for the impact of economic crisis on fertility. Contribution: The study highlights the interdependency of factors related to both social policy and the business cycle in relation to childbearing developments.