[redahs]

The previous explanation of declining fertility rates is a real effect which should not be ignored. Since the 1970s, increases to payroll taxes and decreases to taxes on property and capital gains have increased the tax burden on younger working families relative to older families and inflated the cost of housing. This has prevented American families to afford having as many children as early in life, and caused native fertility rates to decline below the population replacement rate.

An expanding economy which is increasing in specialization requires additional workers to fill these specialized niches. If native fertility rates are declining, then immigrants are likely to fill these roles.

[User23]

Maybe that’s true. Or maybe the arrow of causality runs the other way and increased labor supply and housing demand due to mass immigration of foreign labor drives down wages and drives up housing costs, thereby reducing native fertility rates.

Edit: I wonder to what extent the US current account deficit is funding west coast real estate valuations. I know Chinese cash buyers were a big part of the Vancouver price increases.

[redahs]

The United States is not currently experiencing mass immigration. Its total annual population growth rate including immigration is lower than 1% and has not been this low since the Great Depression. The United States is a relatively lightly populated country per unit of total land area, and many cities in the interior of the country are declining in population despite immigration.

Housing prices are inversely correlated with the property tax rate on real estate and the income tax rate on capital gains. A decline in either real estate property taxes or capital gain income taxes increases housing prices, by making land more attractive as an investment. This effect is independent of the population of the country. If it becomes more attractive to put money into land rather than in businesses which employ workers, and changes to the tax code cause an increase in land banking, then the price of land increases faster than wages and salaries used to buy it regardless of the level of population of the country.

Taxing earned income of younger families via payroll taxes at a much higher rate than unearned increment of land via property taxes and capital gains taxes is basically a very slow moving form of national suicide.