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As living standards improve, people tend to have smaller families. In 2012, 86% of the world’s 120 major metropolises were characterised by higher per capita income than their respective countries and were often more advanced in their economic development. Yet, only in 40% of cases were urban crude birth rates lower than the national level.
Source: Euromonitor International
Note: Graph features the top four cities in terms of per capita annual disposable income differences compared to their respective countries in each of the six regions in 2012.
Essentially, the world’s major cities fall into two basic groups in terms of crude birth rate differences, depending on their stage of demographic transition. In 2012, the majority of emerging metropolises in Asia and Latin America exhibited higher per capita incomes and lower crude birth rates than their respective countries. At the same time, European and North American cities mostly recorded both higher income levels and birth rates compared to their corresponding countries.
Within Asia and Latin America, the principal cities tend to distinguish themselves by notably higher income and lower fertility than their respective countries. The remarkable expansion and economic growth of key urban centres has also set them vastly apart from rural areas in terms of lifestyle changes. Major metropolises feature more elements of modern living – access to education and public health, more diverse economic activities, opportunities for women etc. The growing tendency for young adults to relocate from rural to urban areas has created a higher degree of mobility among younger generations, which in turn means that parenthood is often postponed and family sizes reduced.
Population control policies also contribute towards lower urban birth rates. For example, China’s one-child policy and prevailing preference for boys has resulted in an excess of men and has been a major determinant of low urban fertility. In fact, in 2012, Chinese metropolises (Shanghai, Tianjin and Guangzhou) had the three lowest crude birth rates among 120 major cities in the world – four, six and seven births per 1,000 people, respectively.
Having to care for fewer children, urban parents in Asian and Latin American cities are able to allocate more resources to each child, invest in better education for their offspring and thus improve the overall quality of human capital. Lower urban fertility also leads to a lower youth dependency ratio and a higher proportion of working-age residents in the overall population in these cities. This, in turn, should enlarge their consumer markets and, thanks to much higher disposable incomes, boost discretionary spending.
In 2012, European and North American cities mostly posted higher crude birth rates than their respective countries despite higher income levels (but a much more moderate difference than in Asia and Latin America). Even though historically the fertility of urban women has been lower than that of rural women, higher urban crude birth rates have been encouraged by differences in urban and rural sex-age compositions and the prevalence of young adults in urban areas. Another reason is the sprawl of suburban areas with family patterns similar to those of rural women.
Despite higher crude birth rates in cities, postponing having a family continues in the developed world. Some European metropolises, foremost those in Germany and Italy, had particularly low birth rates of below 10 per 1,000 residents in 2012. Smaller family sizes arising from decreasing fertility are reflected in the changing profile of demand for housing, furniture and other household goods. From a commercial angle, this provides opportunities for greater market segmentation and requires a wider variety of products designed for different niches.