New Zealanders’ population choices

The other day Statistics New Zealand released the annual data on New Zealand birth rates.  There was some coverage of the continuing drop in teen birth rates (it was what SNZ highlighted), but the chart that caught my eye was this one.

TFR NZ SNZ

I’d been under the impression that New Zealand’s birth rate was at, or just above, replacement (roughly 2.1 births per woman, thus allowing for early deaths).   And, according to this summary indicator, it was for a few years not that long ago.    But that is no longer the case.

But what most interested me –  and it isn’t data I’ve ever paid that much attention to –  was the longer-term averages.  It turns out that for forty years now, New Zealand’s birth rate has averaged below the replacement rate (1977 was the last year the TFR had been persistently above 2.1).

This is how we compare with other OECD countries.

tfr OECD

New Zealand is still towards the right of the chart.  But note that only two OECD countries now have total fertility rates in excess of replacement –  one (Mexico) just barely.  The country that really stands out is Israel, with a TFR of 3.1.   New Zealand hasn’t been that high for 45 years.

(Diverting off topic for a moment) the gap between Israeli and New Zealand birth rates has been there for a long time.

TFR is and NZ

At one stage, the high Israeli birth rates were all about the Arab population, but apparently the Jewish and Arab-Israeli birth rates are now equal (Arab rates falling and Jewish rates –  especially among the orthodox –  rising.   (Israel also has a lot of immigration –  together they explain the very rapid population growth I highlighted yesterday – but that is a topic for another day.)

For forty years, New Zealanders in aggregate have been choosing to have slightly fewer children than would, all else equal, maintain the population.  But over that same period, there has also been a very large outflow of New Zealanders moving permanently to other countries (especially Australia).   In the forty years to March 2017, the estimated net outflow (as recorded in the PLT data, with all their limitations) of New Zealand citizens was 845,520.

plt since 78

There is a lot of cyclical volatility, but in not a single year in that period has the flow of New Zealand citizens been back to New Zealand.  In fact, the last time the data record a net inflow of New Zealand citizens was the year I was born.  By international standards, it is a staggering loss of our own people (more than 20 per cent of the average total population over that period).  I can’t think of any other functioning democracy in the last 100 years that has had such a large percentage outflow of its own people.

These New Zealanders have presumably been making their own choices and assessments about the opportunites for themselves and their (actual or potential) children.  Not only have they chosen to have not quite enough children to maintain the population, but many of them (us) have also decided that the opportunities abroad are simply better than those here.  Not all of them will necessarily have made the right choice, but average we should presume that it was a rational choice.  These aren’t simply patterns based on a single year’s whim, a single year’s bad news.

So New Zealanders’ own choices, about their own lives, would have set in train a process that would see a gradually falling population in New Zealand.   Immigration policy, regarding the access of non-citizens, dramatically reversed that, and has in fact given us one of the fastest population growth rates in the advanced world over recent decades.  You have to wonder what insights, and wisdom, our politicians and officials are blessed with that leads them to run a policy operating directly to undermine the effect of the choices of individual New Zealanders.  Perhaps they might share that wisdom, that research, with us one day, before they further worsen the prospects of the New Zealanders who chose to stay living here.

Declining populations do create some issues, as fast-growing ones do.  Over history –  even modern New Zealand’s short history –  many places have grown, and then faded away.  On the whole, it might be better to live in place that had so many opportunities, it could maintain strong productivity growth and offer those gains to more people (at least if transport and housing messes could be sorted out).  But one doesn’t fix the fundamental economic challenges –  that lead people individually to take actions that mean New Zealand’s population wouldm’t be growing –  just by going to a bunch of poorer countries and telling their people they can come here, in large numbers, if they want.   But, as I say, perhaps our political leaders could share with us their apparently superior insights and research results, which back their decisions to place their own preferences above the considered choices of New Zealand individuals.

 

40 thoughts on “New Zealanders’ population choices

  1. Government is voted in by a majority. The decisions that government makes also reflect the needs and wants of a majority of local New Zealanders. This does mean that every 3 years the voting statistics indicate very clearly that New Zealanders have been in the main supporting the high migrant numbers. Most of us older folk do realise that as baby boomers age, the tax pool is going to shrink quite dramatically. This is going to cause business revenue and tax paid that support our desired cushy and wealthy retirement to crash and burn. Our old folk as well need young people to look after our aging and failing bodies.

    Unfortunately, contrary to your studies, New Zealanders in the main do want migration to continue to be positive. Perhaps slowed down a little for housing and infrastructure to catch up but none of that dramatic cuts that will start to impact negatively on business and tax revenues.

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    • It is a reasonable counter-argument, except that on that basis anything govt does has majority support by definition. I doubt you really think that is true. I don’t.

      But there is a tendency to let govts do what they want within limits, on a “surely they know what they are doing, and i don’t care too much” basis. I’d argue that people, in NZ specifically, need to wake up on this issue and realise that, despite the rhetoric, what govts are doing is inimical to NZers’ interests (and working in exactly the opposite direction to their own rational choices about their own lives).

      Liked by 2 people

      • I have said elsewhere, in a previous article, that much of the decision making from our lever-pullers on high tends to self-sabotage

        A perfect example is the governments increase in the taxation of tobacco products (to the point of extremis) while at the same time closing non-central police stations and tightly controlling funding if not underfunding the police department

        Result a crime wave without any evidence of a reduction in smoking

        Liked by 1 person

      • What Maori Party politicians missed, I suspect, was that smoking is not only an addiction but a crutch – the greater the stress in one’s life, the greater the dependence on that crutch, The Maori Party in pushing for these punitive tax increases did so (I assume) mainly based on a hope that in quitting due to the price pressure, their already impoverished people would have more disposable income. Yet, it’s altogether quite likely the opposite has happened and those low income/poor Maori smokers with some of greatest stresses in life, now have even greater stresses associated with making ends meet and that their price-inflicted attempts to cut back has exacerbated problems with self-worth/self-esteem.

        https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1172948/

        http://www.medscape.com/viewarticle/708406_5

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      • A tax on tobacco smoking is a Maori Party policy. Nothing to do with the National government. This is the nature of MMP type government where you will have to compromise so that you get support from your minor coalition parties.

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      • NZ is a immigrant country. Consistently all major parties whether Labour or National have supported migration leading to 25%of of population as overseas born. In Australia it is even higher at 26%. Therefore a majority of New Zealanders do support this issue otherwise Winston Peters would have been prime minister a long time ago with his usual red neck anti migrant rhetoric.

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  2. “Declining populations do create some issues, as fast-growing ones do.”
    You treat NZ as a single entity. Population growth in some cities is explosive and some towns and villages are dying rapidly. In the past you have said this is market forces linked to mechanisation of farming.

    Is it a fair market when benefits are location base? It applies to several benefits but this is the Accommodation Supplement
    Living in North and Central Auckland $225.00
    Living in other high-cost housing areas $165.00
    Living in other main provincial centres $120.00
    Living elsewhere in New Zealand $75.00
    Is our government transferring wealth into our major cities? If so it would be increasing house prices and rents which in turn disadvantage couples starting a family or having multiple children.

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    • I have mixed feelings about those benefit levels. If, for example, we want beneficiaries to get back into the workforce, the last thing we want them doing is moving to places like Kawerau or Te Kuiti. LIving just costs more in the big cities, which is mostly (for now) where the jobs are.

      On the other hand, one could argue that for people who we don’t expect to work again (the seriously impaired who might have been getting the old invalids benefit) we should have incentives to move out of the cities.

      Fix up the land supply market and the problem will be much less severe.

      Of course, there are other areas where differential pricing probably should be applied more. It seems ludicrous, for example, that teachers are on a national salary scale. in most other industries, the market will tend to pay people more in Akld than in, say, Waipukurau or Westport.

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      • Not ludicrous. Increase wages to all teachers and they will regain the status they had when I was a child or at least they will outside Auckland.
        Is living more expensive in cities – anyone in the countryside has to pay for transport just to get to the pub let alone museum, rugby stadium, art installation.
        Do we have any benefit experts reading this blog? I can’t be bothered researching but for example don’t uni student benefits relate to location? Why not close Auckland University and rebuild it in a wine growing or soft-fruit growing area – then adjust the academic year so they can all get out of the library and into the orchards and vineyards.
        I admit you may be right and me wrong at an abstract level. But the changes in our society are occurring too fast and resulting in zombie towns and dysfunctional cities ~ the same process taking place more slowly would make sense [I vaguely remember reading rapid social change => unhappiness].

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      • Increase pay and increase standards/expectations and you’d probably get my support. But I still can’t see the case for paying teachers in Westport exactly the same as teachers in Akld. Accountants in Westport will typically earn less than those in Akld.

        My living costs comparison wasn’t Akld vs the countryside, but Akld vs the provincial city (Hastings, Timaru, Wanganui) or even the small town. Not that I go pubs (or rugby stadiums) but my childhood home in Kawerau was about as close to the pub (or the school ,the supermarket, sports grounds) as I am now, 5-10 minutes drive from the centre of Wellington. Some things might be more expensive in those places, but housing is the single biggest item in most people’s consumption baskets

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      • “Accountants in Westport will typically earn less than those in Akld.” Assume that at a point in time salaries and housing were identical it is reasonable to assume that there would be more accountants attracted to the big city than accountants in Auckland wanting to go to small towns. So in a normal market they would either accept a reduced salary in Auckland or an increased salary in Westport to retain them. This flood of accountants from Westport to Auckland would impact infrastructure with housing in Auckland becoming more expensive and all the empty homes in Westport pushing their housing values down. I cannot see why salaries in Auckland would go up unless employers were feeling generous.

        When the accountant is laid off in Auckland he will receive $225 housing benefit but if we chooses to return to Westport he will get $75. I’ve already explained why I suspect housing costs more in Auckland but 3 to 1 seems extreme (make that about 2 to 1 if Westport is considered a main provincial centre. A healthy society would encourage return to Westport and thus use existing infrastructure more wisely.

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      • On average, firms/jobs in Auckland (and Wellington) are higher productivity than those in the provinces. It is nothing to do with the goodness of heart, but about productivity differences.

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      • I don’t see how a teacher in Auckland is more productive than one in Westport. Maybe access to relief teachers but a very marginal effect. I can ask my wife who works for an accountancy company if she would be less productive if we moved out of Auckland – certainly her spending an hour in traffic returning home in the evening is not productive.
        I can see how a programmer or an economist can be more productive with a larger peer group to steal ideas off but I suspect any figures you have for comparative productivity is matching oranges with apples – cities by their nature have different businesses and some businesses are more productive than others.
        It would be interesting to see how the productivity and salary differences work out somewhere that has a big city with rational house prices (guessing say Atlanta? Memphis? Newcastle? Adelaide?), In other words do bigger salaries mean bigger house prices or is it bigger housing costs creating a demand for bigger salaries.

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      • It isn’t that the teacher herself is more productive, it is that across the economy positions in Auckland earn more than elsewhere, reflecting the average productivity gains (these include the fabled agglomeration gains). That raises the price employers will pay to get labour in those productive sectors, which tends to raise the cost of labour across the board in that city (thru a combination of demand and supply pressures). thus non-tradables – eg haircuts – also typically cost more in Akld than in Westport (and much more again in London or San Francisco).

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      • This is how productivity works. A teacher in Auckland would teach to a class of 25 students. A teacher in Westport would teach to a class of only 5 students. One teacher for 25 students is more productive than a teacher of 5 students. Quality And productivity are not the same measure. But if you can teach to 25 students your salary can be higher but your unit cost per student is lower.

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      • No, class sizes in smaller cities or towns aren’t typically smaller than those in large cities. It isn’t a matter of teacher productivity being higher/lower, simply that other roles in big cities typically pay more and that should spill over into the cost of labour in non-tradables (and public sector roles). As it is, everyone knows that to be a teacher in Timaru or Wanganui offers a much better material living standard than to live and teach in Akld or Wgtn.

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      • Although there is supposed to be a maximum of 27 students in a class, it isn’t uncommon for classes to rise above this, sometimes to as high as 40 students per class, according to PPTA president Robin Duff. Larger classes are typically found in Auckland schools and they are only expected to get larger. Prime Minister John Key says a projected growth in school numbers, especially in Auckland, means the Government has to consider more pupils per teacher or build more schools.

        Journey further down the North Island and it is rather a different story in Taumarunui, a rural area with a declining population. Taumarunui Primary School is doing all it can to attract new students. In addition to offering free uniforms, books and bags, the school is offering teacher aides in every class, free buses to and from school and a daily breakfast through the KickStart Breakfast programme.

        http://www.educationreview.co.nz/magazine/february-2012/finding-the-magic-number/#.WSB-AVSxWfA

        Michael, you are wrong again. The indication is that class sizes in Auckland is larger than regional schools.

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      • Micheal is correct and quoting one article from 2012 proves very little. Teacher funding is based primarily on roll numbers and decile number. More students = more teachers – simple. How staff are allocated depends on school management decisions. Often small low decile schools will have to find other funding streams to maintain smaller class sizes necessary for the achievement of their students and due to their inability to exploit economies of scale present in larger schools. You will find that a low decile school in South Auckland will have similar average class sizes to one in Taumaranui. Funnily enough you will also find most “elite” private schools market themselves on their small classes…

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    • This morning in a conversation I was told “my sister in South Auckland is a single mother with 6 children. I keep telling her to move back home (near Palmerston North) to be with family but she wants to stay in Auckland.”

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      • She is thinking about the future of her 6 kids. It is in larger cities with more people where your career is able to advance and where the head offices are located. You can only climb the corporate ladder where the largest corporates reside and it is in larger cities.

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      • I didn’t inquire further. I was assuming school age kids who possibly would find a better school outside of South Auckland (‘better’ defined by peer group pressures not teachers ability and school resources). I can’t help thinking that the $225 going to $75 might make a small difference. Given that the government is having to build schools and roads and hospitals in South Auckland a decent incentive to return to a quiet village might be a good investment. Of course it takes a potential employee away from the honey pot of Auckland jobs but given 6 kids maybe not an employee with much spare time to actually work.

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    • What would really be interesting would be a breakdown of the total cost of these supplements by geographic area, as well as a breakdown of the number of claims (regardless of cost) by geographic area – and then consider on a per capita basis.

      I’m not convinced that the argument about unemployment beneficiaries as justification for the geographic differential has any merit – given the percentage of unemployed is around 5% of the population (perhaps lower in Auckland?), yet I suspect the percentage of households qualifying for accommodation supplements is much, much higher. In other words, most folks receiving A/S are in employment.

      A bit like WFF, I see the A/S as a subsidy to employers. Someone should do a calculation to determine what the minimum wage would likely need to be raised to in order for these tax transfers to effectively null themselves out. It would just be nice knowing what labour market/price target we need to get to to unwind this tax/transfers mess.

      Liked by 1 person

  3. Michael do you know what is causing the high birth rate in Israel? Is it really just about the Arabs? Or is it because of restricted opportunities for women and/or state support for families?

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    • I only had a quick look. The Arab rate (which i think used to be similar to that in other Arab countries) was much higher than the Jewish rate, but has fallen off hugely (as it has in many other Arab countries). WIthin the Jewish population, I gather all the countervailing increase is among Orthodox and ultra-orthodox Jews. I think there is quite a bit of state support, but I think there is also a strong religious motive. Among secular Jews my impression – haven’t checked again – is that birth rates are European-like. But of course, with high birth rates, the orthodox share of Israel’s population is itself increasing.

      Liked by 2 people

    • The ultra-orthodox hasidi are 10% of the population
      Hasidi women have on average 6.3 children

      The hasidi men are required to undertake religious studies, are exempt from Compulsory Military Service. They survive on state welfare. Some 46% of hasidi men do work. The rest 54% are unemployed

      You might well wonder why they have a high birth rate

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  4. Are you saying that because on aggregate New Zealanders are choosing to have fewer children than the replacement rate, or choosing to moving overseas, they are expressing a desire to see the New Zealand population fall which New Zealand policy makers are overruling by bringing in migrants?

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    • ‘expressing a desire’ would probably overstate what I’m suggesting, but put it the other way round, NZers in their private choices (to reproduce, and to leave (or return)) show no sign of thinking that the country has great opportunities for lots more people. Like most private choices, any systemwide interpretations are implicit rather than conscious, but it doesn’t seem an unreasonable implication, especially considered over decades.

      I’d make the case more strongly for the out-migration choices – which parallel those inside a country where people move to the places with the best opportunities for them. The reproduction case is probably weaker – after all the declining birth rate is a global phenomenon. But if we assume reasonably rational choices on average, i don’t think it is without merit either. And, after all, most of those very low birth rates countries actually do have pretty modest population growth, and there is no evident demand from the citizenry in those places for the govts to take steps to boost population (eg by having an immigration programme NZ’s relative size).

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    • I have several friends that have made the choice to restrict themselves in the number of children they have on environmental grounds. Needless to say they’re not impressed with the level of immigration and its effects. I note several comments from government about the need to increase dairy and fishing and mining etc. to provide more export income, a need that would unnecessary without the booming population.

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      • By having fewer children, your friends have contributed to this migrant issue. They have to ask themselves who they expect to care for them? Their aging mother?

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  5. I certainly agree with your statement that “[…] one doesn’t fix the fundamental economic challenges – just by [artificially increasing the population].” However, the problem is that artificially increasing the population does fix a number of short-term economic challenges for many businesses etc, (whilst creating many more challenges at the same time).
    What is needed is a greater degree of economic and demographic literacy. Many people wouldn’t know what TFR is or that continued 2% population growth would lead to a doubling in 35 years etc or that NZ’s so called “aging population” is no problem at all compared to most of Europe and many parts of East Asia. So keep up the good work.

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    • I disagree. I have an aging mother and an aging father both around 86 years of age. Mother is getting rather frail and needs help moving around by dad who is still very able. But if both of them take a turn for the worst then I will need one of those Phillipino maid services. I myself am approaching 55 years and retirement is always at the back of my mind. But with a younger child and 2 aging parents I have kept working. My parents have not saved for their retirements and that burden has fallen on me and certainly the government super helps them with a better life and have some luxury spending money as I would cover most of their living and accommodation costs. They currently live with me because the Universal super is insufficient for them both to live in comfortable surrounds.

      The reality of a aging population and how to continue to fund 2 very old people is a reality that will soon dawn on more and more New Zealanders.

      The 650,000 New Zealanders in Australia, many of whom have now found themselves unwanted migrants on a Special Visa that is no longer so special will be faced with an uncertain retirement. The speed in which Australia is stripping out subsidised fees could see Australian Super stripped out of their retirement future. They could end up in limbo because NZ will only pay super only if you have been a resident in NZ for more than 10 years and this rule includes all New Zealanders who have been away will also be subject to the 10 year standdown rule.

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      • Actually it’s not fair to say they did not save for their retirement. They actually had $500k saved when they retired at age 58. They just did not invest in a property but instead used that $500k in various businesses, travel and living expenses. Unfortunately those businesses failed, travel and living costs ate up their $500k and I don’t think they had not planned on living well beyond 86.

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  6. This is absolutely stretching credulity of this blog. There’s no way that people migrate out of NZ or don’t have children because they want less people in NZ. People migrate for better opportunities or for personal reasons if they start a relationship with someone outside of NZ. It is absolutely absurd to say that people don’t have children because they want to have less people in NZ, People have as many children as they feel they can manage with their means, and they would want to force *other* people to have less children.

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    • On out-migration, yes the main reason NZers leave is because they judge that the opportunities for themselves and their kids are better abroad than at home. That has the effect of lowering NZ’s population (all else equal) but one of the factors that may affect their assessment of opportunities here might well be the pressure that lots of people put on opportunities in a natural-resource dependent economy. If great opportunities really existed here – and it isn’t as if we have a Castro or Chavez or even Xi Jinping running our economy – one might reasonably expect NZers to stop leaving and flock home. It is what happened in Ireland after they transformed prospects there.

      As for birth rates, there are a whole range of factors at work. My simple point is that for decades, NZers haven’t been acting as if they want to more than reproduce themselves. There is no sense, in their behaviour, of a land of limitless opportunities.

      I wouldn’t want to push this argument too far – it was intended to be a slightly speculative, provocative, post. But economists are trained to have more respect for the concrete choices and actions people themselves make than for political rhetoric, choices imposed by politicians, or even what people tell pollsters. There is no sign in NZers indiv choices of a sense that NZ would be better off with more people.

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      • I’ve meet several (maybe 3) Kiwis who stated they would like a more highly populated NZ. Whereas most/all immigrant would like it unchanged. Which is fairly reasonable when you consider they chose to come here.
        So who most appreciates the special uniqueness of New Zealand culture? Immigrants!

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  7. That bigger NZ mentality goes back a long way. I have a nice book on my shelves from the 50s called Peopling the Commonwealth (or some such), along the lines of how Britain is grossly overpopulated and NZ, Aus, Canada, S Africa, Rhodesia, could all absorb many more people etc. It probably sounded plausible in 1950. But almost 70 years of economic underperformance should have undermined the argument. Instead, there are plenty who will double down and say “if only we increased the population even more aggressively then things would finally come right”

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