Government efforts to increase fertility

This blog posting by Zwi Mowshowich reviews efforts by governments, such as Korea, Singapore, Australia and Hungary to increase birth rates. The author says that simple, uncomplicated financial incentives appear to increase birth rates by mid single digits. These incentives can include cash payments and (in Hungary’s case) lifetime exemption from income taxes for the mother of four children.

Hungary’s full program includes interest-free loans of 10 million forints (about $36,000) to married couples under 40, which can be partially or fully forgiven if they have children; providing subsidies for large families to buy cars and houses; and expanding childcare facilities and services.

The author says that pro-fertility policies can be very complicated efforts to socially engineer more births. However, another take on Hungary’s apparent success cites a wide ranges of factors:  “a basket of policy changes including tax preferences, cash grants, loan subsidies, constitutional protections, and costly political signaling.”

Mowshowich argues that effective programs can be affordable: “The core effort would, like Hungary’s, focus on giving parents money. The more it was direct, immediate transfers, the higher the impact would be. The more it was forced to tie into work requirements and be gradual over time, the less impact. Even then, there is every reason to expect a roughly linear dose-effect curve in reasonable bounds, and for the price to be highly affordable.”

That said, there is no evidence that government policy can come close to raising fertility rates from the 1.0 – 1.5 per woman level, now seen widely in advanced countries, to the 2.1 replacement rate.


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