The gap between women’s wished-for and actual fertility has grown wider according to a new study from the UK.

The paper by the Institute of Economic Affairs shows that while the UK’s total fertility rate hit a record low of 1.44 children per woman in 2023, women’s intended fertility has remained stable at around 2.2 children since 1979. This means they are having fewer children than they want.

The report by Dr Clara E. Piano examines the evidence on the best way to close the fertility gap and tackle falling birth rates. It finds that while ostensibly pro-natal policies focused on cash transfers and financial incentives have limited success, they do not address the root causes of birth rate declines, and are prohibitively costly for most governments.

However, evidence from the US shows states with greater economic freedom – especially in labour market regulation – tend to have smaller fertility gaps. Work-family compatibility emerges as a crucial constraint, with flexible labour markets naturally providing parents with more options to customise work schedules around family goals.

Housing and land use regulation also significantly impacts family formation. Spacious, affordable housing with multiple bedrooms is what economists call a “child-complement” – couples have higher fertility when they can achieve these conditions.