China’s one-child policy struck many Westerners as barbaric. How dare the government limit your choice to bring new life into the world! Yet while the one-child policy was an extreme, most governments nudge family planning in a variety of ways: Western European countries, including Germany and Denmark, have been fighting shrinking populations by offering a variety of tax incentives and subsidies to try and induce people to have more babies. Economic and environmental considerations may mean we’ll see more of these initiatives in the future.
In some ways, a one-child policy in China was unnecessary because economic forces already meant women were having fewer children. Prosperous countries that need more young people are left with two choices: immigration or boost fertility. Before the recession, America’s relatively high fertility was somewhat unusual for a rich country.
But that’s no longer true. Since the recession, America’s fertility rate fell to a level where the population will start to shrink. And there’s reason to believe fertility won’t recover with the economy. For years, Hispanic Americans, mainly from Mexico and Central America, propped up America’s fertility rate. But as they’ve become richer and more assimilated, they are delaying having babies and when they do, fewer of them.
More wealth and fewer babies may be good for individual families, but it puts pressures on an economy with an aging population. At this rate, America may need to follow European countries and consider a strategy to increase its population. So far the falling population has not inspired any sudden moves. It will probably take years for policy makers to recognize the economic consequences of a smaller workforce. But if and when they do, they’ll have to answer a number of questions.
What’s the right number of kids?
Bowdoin Philosophy professor Sarah Conly thinks more countries should adopt a one-child policy because people pose such a grave threat to the planet. Conly’s argument suffers from the same flaw made by previous population doomsdays. She neglects the role of technology in her analysis. Typically, technology allows humans to use resources more efficiently. As we get richer we tend to invent ways to get the same, or more, output from fewer environmental resources. Take the transition away from burning coal during the Industrial revolution to relatively less harmful fossil fuels today. If this trend continues, that means we have the potential to increase the population, or at least keep it the same size, without inflicting more harm to the environment. Even robots won’t make up for people—they may take some of our jobs but they don’t pay taxes.
Meanwhile there exists many economic reasons to encourage families to have more than one child. Economists have models on the ideal population for growth, but knowing the exact right number of babies requires making heroic assumptions about the cost of education and future productivity. A high fertility rate means more workers and growth but larger families have fewer resources to spend on things that make us more productive, like education and nutrition. In terms of GDP, you get more bang for you buck for fewer, more educated citizens than scores of uneducated ones.
One child per family is too few because in order to maintain growth and support retirees, each generation of workers must be multiple times more productive than the last. But it is probably safe to say, given demographic and environmental pressures, maintaining a stable population size is a worthwhile goal, which means 2.1 kids per household. But what’s good for the economy at large and for individual households is not always the same. The cost of education and time off work means households want even fewer children, one or none. It gives the government cause for more intervention.
What’s the most effective way to increase fertility?
One idea is to give people money if they have more kids. A study based on Israeli data found subsidies could increase fertility. This, and other studies, observed that the government does not have much control over having children at all. But if people have one or two, financial incentives can induce people to have another child. The Israeli study suggests giving people cash (or a tax credit) for having an extra child does not make a difference, but reducing the cost associated with children (cheaper child care), can induce people to have another child.
Their work suggests putting resources toward subsidized child care and paid maternity leave (common in Scandinavia, Germany, and France) may be good policy for no other reason than it boosts population growth. These countries also tend to have higher fertility rates compared to their southern neighbors. Demographer Ron Lesthaeghe tells the Guardian:
“In former East Germany fertility is higher than in West Germany,” says Lesthaeghe. “The dividing line, which coincides with what was once the Iron Curtain, reflects two different traditions for the care of small children. There were and still are more nurseries in the east than the west. There are similar contrasts between Flemish cantons in Belgium and neighbouring districts in Germany: fertility is higher on the Belgian side, with ample room in nurseries, longer school hours and better organised out-of-school activities, all of which enables women to have a career and a family.”
Paid maternity leave is normally cast as a family issue in America, but now that the US also faces a shrinking population it may be an economic necessity. The one child policy may be over in China, but shrinking populations could mean government intervention over how many kids you have is just getting started.