Housing Pressure, Youth Unemployment, and Fertility Responses to Economic Downturns in Europe

Europe’s renewed fertility decline has intensified concern about whether adverse economic conditions delay or suppress family formation, yet average macroeconomic effects may conceal the household constraints through which shocks operate. This study distinguishes the direct effects of housing-cost pressure and youth unemployment from their moderating roles in the relationship between economic downturns and the total fertility rate (TFR). The principal analysis uses a common sample of 565 country-year observations from 36 European countries during 2005–2024. Real GDP-per-capita growth is decomposed into expansions and downturns. The main country- and year-fixed-effects specifications use two-year-lagged predictors and country-clustered standard errors. No general direct effect of downturns is detected. In the preferred joint model, the downturn × housing-pressure interaction is negative and statistically significant (b = −0.0035, SE = 0.0013, p = .012), whereas the downturn × youth-unemployment interaction is small and not statistically significant (b = 0.0006, SE = 0.0019, p = .739). Youth unemployment has a negative direct association with fertility when entered without aggregate unemployment (b = −0.0632, p = .013), but youth and aggregate unemployment are highly correlated and cannot be cleanly separated when entered together. The housing interaction remains significant with two-way-clustered and Driscoll–Kraay standard errors and in several robustness models, but not under all lag and country-trend specifications. Its substantive magnitude is modest: a five-percentage-point downturn at one standard deviation above mean housing pressure is associated with an estimated TFR change of −0.0086 (95% CI: −0.0562, 0.0390). The findings therefore support a cautious conditional interpretation: housing pressure is associated with a more negative downturn–fertility slope, while youth unemployment is more consistently related to fertility directly than as a moderator.