Fertility policies don't work

It's the opportunity cost

Photo by Xavier Mouton Photographie on Unsplash

The goal is 2.1. For a country to sustain its population, absent migration, the average woman in a developed country must have roughly 2.1 children. In a developing country, where premature death is more common, it’s 2.3 children per woman. If a country's total fertility rate (TFR) is lower than that, the population will decrease. If it’s higher, the population will increase. Historically, countries have been worried about having a TFR that was too high. China even made it illegal for many of its citizens to have more than one child. That stands in stark contrast to the present day. Today, especially in developed nations, the TFR is too low. Many European countries have rates at or below 1.5. China’s one-child policy was so spectacularly successful that now the government is furiously backpedaling. Their TFR has dropped from 6.25 in the late 1960s to one of the lowest in the world, 1.2.

This presents a massive demographic problem for wealthy nations. Their entire social safety nets are built on having a continually increasing, or at least level, population. A country with a decreasing population will spell disaster in the long run. A society can’t function if retirees outnumber workers. Also, the cultural losses, while unquantifiable, are massive. Japan, which has struggled with a low birth rate for decades, is already seeing ghost towns appear throughout rural areas, as small villages empty out entirely.

So what’s a government to do? The intuitive answer, and the one many governments have gone with, is to reward people for having children. Increased parental leaves, state-funded childcare, and even direct cash payments are used to prod citizens to get busy. Unfortunately, none of them work. They fail entirely at their objective. Most people who would have had kids absent the programs still do, while people who don’t want to have kids are not going to be convinced by a payout equal to a fraction of the cost of raising a child. Programs in Poland and France spent a massive $1-2 million per extra birth. The best case study might be South Korea. Mothers there get three months off, paid. Either parent can take up to a year off, unpaid, and keep their job. Daycare is not free, but is heavily subsidized for all children and costs around $400 a month. The result? South Korea has a TFR of 0.75. This is lower than Vatican City! This has never happened in the history of human society. If things don’t change, South Korea will become an empty husk of itself by the end of the century.

The counterintuitiveness of this is hard to overcome. Many people will tell you they want to have more children, but can’t afford it. Thus, give people money, or make having children affordable, and they will. Never mind that this has been proven wrong time and time again. Even those who know fertility policies are worthless fall into this trap. Writing in an op-ed for the New York Times, Anna Louie Sussman says, “The most woman-friendly and birth-friendly regime I have come across so far is in Denmark, where child care is subsidized and extensive parental leave is provided.” Several paragraphs later is the lede: “Denmark’s policies haven’t changed the trajectory of the nation’s falling birthrate, which now stands at about 1.5 per woman.” Elsewhere in the same essay she says,

To date, no government policies have significantly improved their nation’s birthrates for a sustained period — at least no policies whose lessons are easily transferable to other countries.

Yet she concludes by saying:

A suite of proposals that included affordable child care, universal health care and paid family leave would most likely prompt a different reaction: Relief. Security. Maybe even another baby or two.

No! Bad! When all the facts point in one direction, you can’t simply handwave it away by claiming “lawmakers are looking in the wrong places.” If hundreds of policies in dozens of countries from vastly different cultures have all failed, it means it isn’t a problem the government can solve! Not we should waste more money on plan 159(a)-3. Throw in the towel.

The reality is that birth rates have declined worldwide for several reasons. People are waiting longer to get married. There seems to be a growing mismatch in what women and men want in a partner. Housing prices are rising.

The most obvious is the availability of birth control, one of the most underrated inventions of the 20th century. While computers changed how we communicate information and cars changed how we travel, birth control changed what it meant to be human. No longer do women have to have children. They can choose when, or even if, they want to have any at all. Giving women control over their reproductive systems has enabled cultures to change by previously impossible amounts overnight. Bangladesh had a TFR of 6.91(!) in the 1970s. In other words, the average woman could expect to have nearly seven children. By the 2000s, the TFR was under 3.0. That doesn’t happen without a momentous new technology.

A lot of other changes are downstream of the pill. The biggest is the success of the women’s empowerment movement in the labor force. In 1955 the labor force participation rate for prime-age women was only 35 percent. By the mid-1990s it was over 75 percent. This fundamentally changed the birth vs work calculus. In a time when women were denied entry to most careers, having children didn’t mean giving up much. Today, when Millennial women in some areas out-earn men, the cost of having children is high. Even with parental leave, common sense says that having children will detract from a career. Governments can piddle around at the margin all they want, but unless they are going to pay every family to have a full-time nanny until their children school age, it’s not going to move the needle. The opportunity cost of having children is just too high for women today.

This is a problem without an easy solution. To keep the population level or growing sustainably, at least countries like the United States can always rely on migration. For nations that want to keep population level through natural replacement, no government policy is going to do the trick. None of the rich nations of the world have a replacement rate above 2.1. Instead of engaging in a futile battle to significantly increase the population, governments need to plan for the inevitable. Will they rely on immigration? Will they let the population age and hope for the best? It will be interesting to see what choices are made over the next 50 years.