Birth Quake: The Baby Boom and its Aftershocks

The multiplicity of impacts emanating from a generation being smaller or larger than its parents’ generation has concerned demographers since the 1970s when the issue was the focus of work by Richard Easterlin. The baby boom – the substantial rise and then fall in birth rates in many industrialized countries during the 1940s to 1960s – has given rise to much interesting debate on its causes and consequences. For example, a considerable amount of literature now exists on the likely social and economic impacts of the baby boom generation moving into the retirement ages over the first quarter of this century (in areas such as pensions and healthcare costs, the “grey” vote, changes in demand for products, and so on). Diane Macunovich has played an important role in the investigation of the baby boomers and cohort size fluctuations in general over the last decade. Synthesising previous work by the author, this book focuses on “how so much of the social and economic change over the last 50 years has been related to the post‐WWII baby boom and that generation's passage through the life cycle” (p. 2). The principal focus of the book is the United States. As the author notes in chapter 5, early studies on cohort effects placed quite a lot of importance on relative cohort size. These studies concluded that the crowding of the labour market by the large baby boom cohorts resulted in lower wages relative to smaller cohorts because younger workers are not perfect substitutes for older workers with more skills and experience. These studies also predicted that the cohort effect of lower wages would ameliorate over time as the large cohorts aged, and that the economic prospects for the smaller post‐baby boom cohorts were favourable. When in due course these predictions were proved to be wide of the mark it was concluded that cohort effects were less important. Macunovich challenges these conclusions, arguing that substantial cohort effects can be seen once other factors are accounted for. For example, she argues that cohort size effects are asymmetric – that those on the trailing edge of the baby boom are in a worse position than those at the leading edge because they enter an already crowded labour market. Cohort effects therefore do not disappear as soon as the annual number of births fall. The other factors which the author argues should be considered are the changing role of women in society, immigration and international trade and the Vietnam war.

The book is divided into four parts and 17 chapters (one introductory chapter which is unnumbered followed by numbered chapters 1‐16). The introductory chapter provides an overview of the work and sets out what the author describes as the three levels of relative cohort size effects: direct effects on male labour market experience such as relative income (income relative to the desired income), indirect effects operating through male labour market experience such as changes in family size, and third‐order influences on the economy as a whole. These three levels of effects are used as the main organising principle of the book, with parts two, three and four addressing each of the levels in turn. Part 1 establishes concepts and definitions. Chapter 1 introduces the concept of relative cohort size and sets out a number of other influences which it is argued should be included in the analysis. The significance of male relative income forms the focus of chapter 2 whilst issues surrounding the measurement of relative cohort size and relative income are discussed in chapter 3. Part 2 on the first‐order effects of relative cohort size begins with chapter 4, a brief look at how male relative income has varied in the US over the last three decades of the twentieth century. Chapter 5 examines the effects on long‐term unemployment, relative income and the financial returns to higher education. It shows that a model fitted to data up to 1988 based on just relative cohort size, the size of the military and international trade successfully “forecasts” male relative income for the subsequent decade. Chapter 6 discusses the effects on income inequality and wages (disaggregated by education and experience). Chapter 7 on female labour force participation begins with part 3 on the second‐order effects of relative cohort size. It offers an explanation of why female labour force participation rose substantially in the two decades from the mid‐1960s when the trend in real wages for women (disaggregated by education and experience) was flat. Higher education enrollment is the focus of chapter 8 whilst chapter 9 moves on to consider the impacts on marriage and divorce. The disappearance of the marriage wage premium is discussed in chapter 10. In chapter 11, Macunovich develops a model explaining the baby boom and bust using relative income and women's wages as the predictor variables for the fertility rate of women aged 20‐24. The fit is extremely good. Moving away from the US focus, chapter 12 explores relative cohort size effects in developing countries, arguing that such effects can help explain the timing of fertility declines in the demographic transition. Part 3 considers more general effects of relative cohort size, starting with aggregate demand effects in chapter 12, economic slumps in chapter 14 and various macroeconomic variables such as inflation and savings rates in chapter 15. Conclusions are presented in chapter 16.

Macunovich's work is helpful in reminding demographers and other researchers that population processes do not just passively react to changes in society and economy, but that causality also runs in the other direction. Despite the concentration on this latter direction, the author is careful not to claim that demography explains everything, but that one of the aims of the book is to “restore balance in a world of models that focus on those other factors without ever considering population change” p. xi). The author makes a strong case that cohort effects on the economy and society are very important in the United States. But are these findings relevant to other industrialised countries that experienced baby booms, and indeed to all countries? As the author remarks in the conclusion, this work remains largely to be done. As well as extending the geographical extent of this work the author believes that it would be useful to extend the investigation to see what other effects there might be of relative cohort size. In terms of demographic effects the author includes marriage, divorce and fertility. Demographers have just started to examine relative cohort size effects in relation to internal migration (Pandit, 1997) and wonders whether similar analyses of mortality may prove fruitful (thinking in particular of the marked decreases in mortality rates in England and Wales peculiar to cohorts born during the low birth rate years of the late 1920s and 1930s (Willets, 1999)).

Amongst the many strengths of the book are the well‐constructed explanations and clarity of writing, features which will make the book accessible to social scientists from a variety of backgrounds. Each chapter helpfully contains a short summary, about a page in length. In addition to researchers working on economic and demographic issues this book will be useful for students from advanced undergraduate level upwards. There are only a few things that might have improved the argument a little: some of the graphs and their accompanying text labels were small and difficult to read and I would have liked to have seen a few more details on the models used (including some equations). However, in summary, this is a stimulating and lucid account of just how relevant and important demography is to economic and social realities. I recommend this book to social scientists.