Can generous family policies help boost fertility rates?

CNA Staff, Jun 20, 2024 / 06:00 am

Advocates and policymakers have for years argued that extending family benefits — such as paid leave, job guarantees, and cash payouts for new babies — could help reverse the steep declines in fertility rates observed in recent decades in most of the developed world. 

The data, meanwhile, paint a less optimistic picture, though there are signs that some policies could play a role in convincing families to have more children. 

Government leaders in numerous countries have been struggling in recent years to address falling birth rates. In South Korea, for instance — where the birth rate has cratered to less than one birth per woman — the Seoul metropolitan government will next year begin offering housing subsidies to newlywed couples, in part so husbands and wives might have more children. 

Some private companies in South Korea, meanwhile, have begun offering generous baby bonuses to employees.

In Taiwan, which has a similarly grim birth rate, the government has grown desperate enough to begin hosting its own singles mixers in the hopes of encouraging men and women to marry and have children. 

The Japanese government, meanwhile, has vowed to take on the country’s perilously low birth rate, with the Tokyo government launching its own dating app and the national government considering expanding both child allowances and parental leave.

European countries are trying to institute their own policies and incentives to boost birth rates. 

Italy is offering “baby bonuses” to couples, doling out a monthly allowance for the first year of a new baby’s life.

In France earlier this year, President Emmanuel Macron proposed free fertility checks for 25-year-old women. The government is also looking to expand its parental leave policy.

And the Greek government has raised its own baby allowance in a bid to fight the country’s low fertility.

‘It takes a rather large amount of money’

Beyond special measures that specifically target falling fertility rates, many countries have offered generous family policies for decades. Sweden, for example, began offering parental leave benefits in the 1970s, while Germany has offered various forms of paid leave for nearly as long. 

Yet both of those countries are nevertheless posting birth rates well below “replacement rate,” or the rate necessary to keep a population stable. Below the replacement rate, a country’s population will inevitably decline.

Essentially every country in Western Europe is recording sub-replacement fertility rates, as are the U.S., Canada, and many Asian countries.

Lyman Stone, a research fellow at the Institute for Family Studies and an adjunct fellow at the American Enterprise Institute, told CNA in an interview that there have been numerous studies in recent years on the effectiveness of family policies in boosting the fertility rate. 

“In general, these policies work,” he said. 

Stone pointed out that there are “nuances” to the data. “It takes a rather large amount of money,” he acknowledged. But “not an implausible amount,” he said.

He noted that a family policy’s effect on fertility depends on the policy itself. Some policies merely guarantee a parent’s job will be held for a period of time after a baby’s birth; others offer straight cash payouts for a new baby.

“What the research suggests is that job guarantees have probably no effect on fertility, and possibly in some contexts have a negative effect on fertility,” he said. 

“Job guarantees might convince currently employed people to have a bit more babies than they otherwise have; they may also convince people who might have stayed home to have another baby to return to the workforce. Job lock doesn’t seem to do very much.”

“However, the compensation side does,” he said. “When you increase the wage replacement rate for maternity leave programs, you get more babies.” 

“Money works,” he said. “Job guarantees probably don’t have a big effect.”

Stone pointed to a 2017 study from Anna Raute, an economics professor at Queen Mary University London, one that examined a “major maternity leave benefit reform” in Germany that “considerably increase[d] the financial incentives for higher-educated and higher-earning women to have a child.”

Raute in her study found “an up to 22% increase in the fertility of tertiary educated versus low educated women” stemming from the new policy. 

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Stone said the overall picture of the data is straightforward. “If you put more money into families, you get more babies,” he argued. 

‘You need to solve it for 18 years’

Not all experts are as confident about the data, however. Catherine Pakaluk, an associate professor of social research and economic thought at the Catholic University of America, said the field doesn’t have “enormous experimental data on paid leave and maternity leave policies,” mainly because “they’re hard to implement at a really huge macro level.”

But “if you survey leading economists and demographers around the world, the bulk of the evidence is that it doesn’t work,” she argued. 

The source of the stubborn problem, she said, lies within “the collision between career and family” that occurred throughout the 20th century as more and more women went to work. Pakaluk described this phenomenon as “an enormous inflection point.”

“That is the source of low birth rates,” she argued. 

“The goal of a good maternity leave program is to keep women attached to their jobs,” she pointed out. “They have the baby, they stay home, then they can return to their jobs.” 

But “is keeping women attached to their jobs longer — past the birth of their child — likely to solve the problem that arose in the first place with the tension? What we’re trying to do is, in a sense, more of that which got us the problem in the first place.”

“It sounds a little weird,” she said, “but the point of maternity leave is to give women a break right after a baby comes. Well, you’re resolving the tension for just six weeks. Okay, double it. You’ve solved it for 12 weeks.” 

“You need to solve it for 18 years,” she said bluntly. 

Indeed, there are signs that the fertility crisis goes beyond concerns of financial stability. In one recent survey, a majority of Americans who don’t want children cited “maintaining personal independence” as a motivating factor. 

Large percentages, meanwhile, also cited politics, work-life balance, and “safety concerns” in addition to financial constraints.

Pakaluk, who has eight children, says couples “have to figure out a 20-year solution for how you’re going to make work and family work together.”

“Once that conflict has been settled, in that context, a generous maternity leave can be a really great benefit or blessing,” she pointed out.

“For people on the margin, who haven’t got the 20-year thing solved, I don’t see how it’s likely to incentivize people to solve a 20-year plan,” she said. 

Stone, meanwhile, said that even when they do work, family policies should not be seen as a panacea for low fertility rates. He shared with CNA a survey he co-authored on the effects of various family policies on fertility, one that found mixed results across various countries.

The effects of those policies, the survey noted, are “sufficiently irregular that they are likely contingent on the wider realm of social norms and political structures in which the policy is implemented.” 

“Family leave probably helps boost fertility in contexts where it is part of a wider pro-family policy regime, complementing, supporting, and enabling voluntary family choices,” the review said. 

“But implementing family leave on its own, or in a context where parents primarily want to make bigger investments per child rather than having more children, may have little impact on fertility.”

Stone told CNA that “all these different family policies have a different role.”

“None of them is a silver bullet,” he said. “They’re part of the types of things that societies would need to do if they wanted to get fertility rates meaningfully elevated.”