Right now, choosing not to have children is massively rewarded financially.
If you don’t have kids and aren’t reckless with money, you will almost certainly retire earlier and far wealthier than someone who spends decades supporting children. Even if you are reckless and burn two-thirds of that extra income on short-term pleasures, investing just one-third puts you far ahead of parents financially.
That means having children is not just a personal choice, it’s an economic penalty.
Instead of trying to “reward” people for having kids (which Western countries realistically can’t afford due to debt levels), we should aim to make having children financially neutral. In other words: raising children should cost roughly the same as remaining child-free.
This would make having kids a genuinely free choice rather than a financial sacrifice. People who want children wouldn’t be punished for it, and people who don’t want them wouldn’t be forced into it.
One way to achieve this is by offsetting the long-term financial disadvantage parents face. Another (more controversial) option is taxing child-free adults more, but placing that money into a personal retirement account for them, since they are not contributing to sustaining the population that supports pay-as-you-go retirement systems. That would at least make the trade-off explicit and fair.
The goal isn’t to shame child-free people or force anyone to reproduce. The goal is to ensure that having children does not leave you objectively worse off for life. I believe that alone would raise birth rates closer to replacement levels.
I know this idea is idealistic, and the hardest part is implementation:
Who qualifies?
What about people who already had children?
What about those who can’t afford higher taxes up front?
But despite trying to find alternatives, this is the most balanced solution I’ve come up with so far.
Only way to solve birthrates is to make raising children financially neutral compared to staying child-free
byu/Otto0709 ineconomy
Posted by Otto0709
14 Comments
What are you solving for exactly? Most economic considerations for declining population can be solved through legitimate immigration policy.
Couples may have more kids when the country seems like a good place to raise them.
We went through three stages:
(1) children were financially beneficial for young parents (farm labour etc),
(2) children were financially beneficial for elderly parents (retirement etc),
(3) children not being financially beneficial at all (today)
We need to get back to stage 2 and link children to retirement again. Those who do not have children should not be free riding on the children of others when they retire.
I think many people use economics as an excuse not to have children. The truth is, they are just too busy with their lives to bother being locked down with children. You have:
– people who don’t want to commit to a relationship long-term and see children as an anchor
– people who want to spend money they could easily spend on raising children on other lifestyle interests (personal choice), and I know your ideas above sort of address this one.
– people who are becoming less social due to the internet and a world that allows for people to get by without interactions will be less likely to develop social bonds that lead to having children
– people who once had no other options in life but to have children now can pursue careers and other goals
– people outright see children as a burden and not a blessing
Making children not cost more I believe will have limited impact on birthrates. Many of these people would find another reason not to have children once money was no longer an issue. It’s also not that simple. Many people who take on the roles as parents will pay a premium for their kids to have the best of the best. In a world of scarcity, eliminating costs say for food will only increase demand and cost for other things such as dance classes, college prep tutoring, and whatever parents pay a lot of money for these days to get their kids ahead of the curve.
But if we divert revenue so workers can raise families, that will reduce the steady growth in the number of billionaire industrialists.
From what I understand this used to sort of happen informally. People with families made more money in the same job and were more likely to get promoted. There was an acknowledgement that people with families had more responsibilities and deserved/needed support. Implicitly that was a push to others that they should consider starting a family.
Today, that practice would be considered discriminatory (along with lots of other hr practices from that era).
It’s for the best that we don’t have private companies filling the gap and deciding who “should” make more money based on their family composition, but there does need to be some more support for those who want families. I have too many people I know who are putting off families or having fewer kids because of the cost. Often specifically housing and daycare costs.
In also agree we shouldn’t shame people for not having kids. We should meaningfully reward those who do. This doesn’t even need to be direct financial compensation. There’s evidence that investing in parks, child care, libraries, community spaces all can help ease the many challenges of having children, especially in an urban environment.
In Sweden all families with children under 16yrs old receive about $140 cash per child, Parental leave is 480 days w/80% pay, and they have publicly funded Healthcare. Sweden’s birthrate is still falling.
lol
I’m a fervent materialist, but this is too rich for me
We don’t need to “fix” birth rates.
Can it be argued that children, like nearly everything in modern society, have been monetized? Feeding, clothing, teaching children have become for profit.
As humans have gotten richer we have fewer children. On the margins cost is an issue but in today’s world we choose when to have kids and having kids is 20 years of exhausting hard work.
Once upon a time unprotected sex was a primary form of entertainment. And you can’t do much in candle or firelight but bump.
Do you have any data to support your hypothesis that the financial matters you describe correlate with birth rates?
Millennial here. I see it as just a choice and everyone is free to choose for themselves. “Population collapse” is a real concern but governments getting in the mix will only eventually make things worse. There are already tax credits but if the govt really want to go further, increase the deductions and cut spending and stop devaluing the dollar.
That being said, I think people who want to have kids and don’t feel like it’s possible would be shocked to find out how much you can really just “figure it out.” I was young when I became a parent, 21 (obviously not on purpose). I was reckless, no career, and no direction at the time. Having a kid drove my wife and I to succeed more so than any personal ambition. I took some chances and risks, got into a career I would have never thought would be something I could/would do. It took several years but I worked extremely hard. Very long hours, rarely any days off, lots of mistakes, lots of time learning and developing skills.. Eventually I started to make good money and then took another huge risk and opened my own company. My wife is now more or less retired. She has her own business now but only works when she wants to and because she wants to.
No one gave it to us, no one supported us financially. We live several hours from our nearest family so we had no one around for free childcare either. We worked opposite schedules most of the time in the early days so one of us could always be home. It’s not ideal for a relationship, but we figured it out. Having children is more rewarding than anything else I have ever done.
Universal Healthcare for all children under 18 years old, free education, daycare, school lunches and after school programs. How can these be funded for? Tax the rich!