By Tim Sargent
May 7, 2024
Executive Summary
In this paper we examine three questions: do people gain significantly from being part of a family; what are the trends in family formation in Canada over the past two decades; and what factors explain these trends?
We find that being part of a family is very beneficial, both in terms of income and of overall well-being. Adults in a couple earn significantly more per person than singles of the same age, and married people live longer and have better mental health and well-being than non-married people, even common-law couples. Children in two-parent families have a much higher standard of living than children in one-parent families, even allowing for benefits and child support. Furthermore, children raised by their original parents have, on average, better life outcomes than children raised in one-parent families or in stepfamilies.
However, despite these advantages, fewer people in Canada are getting married or cohabiting, and those that do are having fewer children. An increasing proportion of Canadians in their late twenties and beyond are living with their parents, and an increasing proportion of this age group is remaining single. These proportions are higher than in the US or the UK, countries that are culturally comparable to Canada.
Furthermore, Canadian women are having fewer babies. Canada’s birth rate is the lowest ever recorded, with women in their twenties putting off childbirth to their thirties, or foregoing it altogether. Canada now has the third-lowest fertility rate in the G7, lower even than Germany, and significantly lower than the US or the UK.
At least a third of Canadian children will see their families break up by the time they are 14, and more than a quarter live in one-parent families. While the proportion of children in one-parent families has remained stable in recent years, it is higher than in the US, the UK, or France.
Explanations for these trends fall into two categories: economic factors, such as incomes of young people and housing affordability; and broader social and cultural factors. From an economic perspective, incomes of young people, especially couples, have been advancing. However, real housing prices have risen dramatically in Canada over the last 15 years, both absolutely and relative to the US and the UK, and home ownership rates have been falling for younger people.
The nature and impact of broader social and cultural trends is hard to measure, but it is clear that there has been a marked reduction in the mental health of young adults, and a corresponding rise in anxiety about the future. Nonetheless, when surveyed, women still say that on average they would like to have 2.2 children, well above current levels.
Our findings imply that current assumptions about fertility rates embedded in official projections are significantly over-optimistic; indeed, these projections do not even match current fertility rates let alone the further drops we are likely to see as a result of the trend to reduced family formation. Furthermore, a higher proportion of singles in the population is likely to have other negative fiscal consequences for governments.
Given the clear individual and social benefits of marriage and children, there is a case for making sure that public policy does not impede – and preferably promotes – family formation and fertility. Clearly such policies would need to target housing affordability but would likely need to go beyond this to engage with some of the broader social and cultural trends prevalent among young Canadians, particularly anxiety about the future.
We close the paper by suggesting some next steps for research. These could include modelling future dependency rates based on the trends we have found in marital status by age, as well as more in-depth analysis, including across countries, provinces, and characteristics such as immigration status, to learn more about the causal factors leading to the trends we observe. This work could help lead to the development of a comprehensive policy agenda to deal with these negative trends, which could be illuminated by the experience of many countries around the world that are grappling with low rates of family formation and declining birth rates.
Read the full paper here:
