Executive summary

Norway had a Total Fertility Rate (TFR) that was well above the OECD average for much of the 1990s and 2000s, but since 2009 has been experiencing a rapid decline in fertility. With a level of 1.98, the 2009 TFR was reasonably close to replacement level and as high as last seen in 1975. However, over the following years, the Norway’s fertility dropped by almost 30%, falling to a TFR of 1.41 in 2022, the lowest rate in Norway since OECD records began and well below the OECD average.

The choice to have (more) children is influenced by a variety of factors, including economic and financial security, as well as the continuous availability of family policy supports that help parents of (young) children. OECD-wide analysis confirms the importance of family policy, economic insecurities, and labour market opportunities in shaping fertility trends. Compared to other OECD countries, Norway is performing relatively well on many of these measures. As such, Norway’s fertility decline is a conundrum sparking concerns about potential downstream implications for population ageing and pressures on the Norwegian fiscal framework.

Norwegian family policy does not explicitly aim to increase fertility. It aims to ensure safe economic and social conditions that support children’s development and the overall well-being of families enabling both parents to balance work and care obligations. Norwegian family policy is comprehensive and offers well-paid parental leave as well as universal and affordable Early Childhood Education and Care (ECEC). Facilitated by 15 weeks of earmarked parental leave for fathers, Norwegian men – who take about a third of all leave on average – take more parental leave than men in other OECD countries. However, fathers face stricter eligibility requirements for shareable leave, requiring that the mother works or studies at the same time. Aligning these conditions with those for mothers – who are not subject to work requirements of their partners – would be fair and could further increase paternal involvement in leave taking.

Since the early 2000s the use of the cash-for-care benefit fell from 75% of all children aged 1 to 2 to less than 25% in 2011, as with the 2003 Kindergarten Agreement (Barnehageforliket), public investment in ECEC expanded to increase capacity and affordability. ECEC enrolment rates are now among the highest in the OECD, both for 0-2 year-olds (58%) as well as 3-5 year-olds (97%). While application procedures were previously considered as cumbersome, the recent automation of case management may close the gap in eligibility and take-up of discounts of ECEC-fees, especially among vulnerable families.

In view of the timing, it may appear as if Norway’s fertility decline started because of the financial crisis in 2008-09. However, Norway’s robust economy only experienced a slight downturn and rapidly recovered, making it an unlikely explanation for the continued fertility decline throughout the 2010s. the last decade has been marked by strong increases in housing costs, especially for the young, while the perception of economic security seems to have worsened as well. This may have made it more complicated to establish the necessary conditions for family formation, despite objectively secure and stable economic conditions. To reduce housing costs for the young, Norway could increase the stock of social housing or improve incentives to rent out homes by removing tax concessions for homeowners.

The Norwegian labour market is remarkably stable and tends to provide families with the necessary financial stability for family formation. Good work-life balance and family supports allow both parents to combine careers with family responsibilities, resulting in one of the smallest gender employment gaps in the OECD among 25-54 year-olds (5 percentage points). However, Norwegian women in this age group are still more likely to engage in part-time employment (19%) than Norwegian men (8%), often to accommodate family responsibilities with labour market careers. While Norwegian women spend more time on unpaid house- and care work than Norwegian men on average (1 hour), this gender gap is among the smallest in the OECD. Encouraging a more equal sharing of part-time work when children are young could reduce the gap in unpaid work further. With a comprehensive equal pay auditing system, Norway has also a comparatively small gender wage gap (5%).

As the drivers behind Norway’s fertility decline do not seem to be found in family policy, the economy, or labour market opportunities, a part of these developments may be attributed to changes in social norms and attitudes towards family formation. This is perhaps most noticeable in the fact that Norwegian parents have their children later in life and opt for smaller families than previous generations did. The causes of these changes are complex and varied, but can include shifting gender roles, increasing focus on careers and education, and how parenthood is prioritised relative to other life goals.

Declining fertility will have a substantial impact on Norway’s economy and society going forward, despite the comfortable fiscal cushion provided by the sizable Norwegian Sovereign Wealth Fund (Government Pension Fund Global). Norway’s population will age substantially in coming decades, with public expenditure on pensions and health rising noticeably. With an ageing population, there will also be a significant rise in long-term care (LTC) demands. If there are no significant decreases in the staff-to-patient ratio, Norway would have a substantial mismatch between supply and demand of LTC workers by 2060. These developments are unlikely to be averted even if the TFR were to increase.

Norway will have to adapt to an ageing society. The government should continue to support Norwegians to have the number of children they desire at the time of their choice, while preparing for a future with new demographic challenges. This may require prolonging working lives, increasing long-term investment in private pension savings and improving productivity to reduce future fiscal pressures. Encouraging more people – particularly men – into the LTC workforce, while making better use of current personnel through technology and digital solutions, are approaches that respond to the quickly increasing demand for LTC. By taking a comprehensive and forward-looking approach to these challenges, Norway can position itself for a successful and prosperous future.

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