Low Fertility Rate and Consumption Behavior of Households in Taiwan

Abstract

Since the economic consequences of a low fertility rate, such as a change in consumption patterns, might affect the path of economic growth, this study investigates how the relationship between the low fertility rate and consumption behavior in Taiwan has changed over time. Using county-level panel data from 1995 to 2014 to examine the impact of the low fertility rate on the consumption behavior of households in Taiwan, the major finding of this study is that a low fertility rate will change the behavior and the composition of consumption. A low fertility rate will increase the share of the total consumption expenditure in a household’s disposable income, in particular, in relation to the consumption categories of food, health care, education, and transportation and communication, but will decrease the share of expenditure on clothing in the household’s disposable income.