everyday economics and the birth rate

Which Countries Want You to Have a Baby?

by Elaine Schwartz    •    Apr 20, 2014    •    1854 Views

It is a recipe for demographic disaster when you have too many old people and not enough babies.

The problem is the size of the working age population. When countries like the US are affluent enough to provide support to the aged, transfer payments are funded by the labor force. So, the larger the younger group, the lower the individual burden.

Japan is close to the top of a list of countries that are growing old. With an elderly dependency rate that could reach 60 by 2050 (60 people aged 65+ for every 100 people, 19-64), government policy is encouraging dating and mating. Appreciably below the 2.1 replacement level, Japan’s fertility rate is 1.41. Trying to reverse the trend, the Japanese government has targeted population growth with $29.3 million.

Yotaro, the Japanese robot baby in this video, is supposed to make parenting irresistible:

Comparably, Singapore has a fertility rate that recently rose to 1.3 per woman. As with the US and Japan, it is the working population, whether through government transfers, elder care or just by contributing to the affluence of their economy, that will need to sustain their parents and grandparents. Much more proactively than Japan, Singapore has increased the incentives to have more children by upping government assistance for fertility treatments, for paternity leave and married couples’ housing. In addition, the more children you have, the higher your medical account subsidy–S$6000 for the first 2 births and S$8000 each for your 3rd and 4th child.

In Europe, countries with family friendly incentives include France, Germany, Finland, Denmark. Train fares and movie tickets are cheaper in France if you have 3 or more children. Offering, “parent money,” Germany gives a generous “baby bounty” for a second child.

Looking at the Old Age Dependency Rate (ODR), you can see why European countries are offering “baby bounties:”

From: "

From: “The Old Age Healthy Dependency Rate in Europe”

Our bottom line takes us to a structural economic shift in which entitlement programs are only the tip of the iceberg as land, labor and capital, savings rates, and the production of goods and services are affected by aging populations.

Sources and Resources: Whether looking at a Washington Post description of the “Do It For Denmark” campaign, the Yotaro video, an excellent paper from MIT or articles from Bloomberg, Quartz and IB Times, the resources about the expanding aging demographic in the developed economies are varied, occasionally fun, and sometimes worrisome.

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