Pro-Natalist Policies – The Jury is Out

“By 2050, over three-quarters (155 of 204) of countries will not have high enough fertility rates to sustain population size over time; this will increase to 97% of countries (198 of 204) by 2100.”

Global fertility in 204 countries and territories, 1950–2021, with forecasts to 2100: a comprehensive demographic analysis for the Global Burden of Disease Study 2021, Lancet.

Fertility rates around the world are falling off a cliff. From 1950 to 2021, total fertility rate (TFR) more than halved from 4.84 to 2.23 globally. By 2021, over half of all countries and territories were below replacement level of two births per woman. 

Prolonged fertility rates of 1.3 children per woman reduce a country’s population by half in less than 45 years. Many European countries have already reached this point. Australia’s current fertility rate is 1.63 births per woman. 

The world is experiencing a real baby bust. 

Robust fertility rates are essential for economic prosperity and societal stability. They ensure a continuous influx of a younger workforce, fostering economic growth through increased productivity and innovation. Moreover, higher fertility rates stabilise social systems by providing intergenerational support for older demographics. Additionally, growing populations drive consumer demand, promoting market expansion and providing business opportunities crucial for sustained economic development. 

Economic downturns, including a lack of affordable housing, also often prompt couples to delay having children, at least temporarily.

From a libertarian standpoint, robust fertility rates underscore individual freedom, allowing people to make autonomous decisions about family size without undue interference. Furthermore, they contribute to economic self-sufficiency, reducing reliance on government welfare programs and fostering a culture of personal responsibility. Sustainable population growth also maintains market dynamics, encouraging competition, innovation, and entrepreneurship organically, without the need for artificial population control measures.

Governments know that a population in decline is a bad thing. In a bid to increase fertility rates, numerous countries have implemented pro-natalist policies. According to the United Nations, 10% of countries had such policies in 1976, 15% in 2001 and 28% in 2015 (being their most recent data). However, assessing the results of these is quite challenging. 

Governments often fail to reevaluate their policies, including those designed to increase birth rates. This phenomenon was described by Milton Friedman: “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” 

Governments are spending big, but have not stopped to study the results of their pro-natalist policies. From the available evidence, it appears clear that pro-natalist policies result in small and transient effects on total fertility rates.

The USSR pioneered the implementation of pro-natalist policies. Following the fall of the union, some countries in Central and Eastern Europe continued pro-natalist benefits in spite of severe economic conditions and budgetary pressures. 

Two examples from 2005 – in Czechia, spending per child equalled 60.8% of GDP per capita, and 51.3% in Slovakia. These are twice the average of OECD high income countries, which was 26.8%. The birth rate increase in both countries was modest: Czechia’s birth rate in 2005 was 1.29; by 2010 it was 1.51 and by 2021 it was 1.83, still not at replacement level. Slovakia’s birthrate in 2005 was 1.25. By 2010, it was 1.34 and in 2023 it was 1.55.

By 2021, over half of all countries and territories were below replacement level of two births per woman. 

From 2007 to 2016, Russia offered mothers who had their second or third child 250,000 roubles (about US$12,000), approximately the average annual income. Evidence suggests that the birth rate for women aged 25-29 increased from 78.4 per 1000 women in 2006 to 99.8 in 2011. However, the annual birth rate change dropped from +2.460% in 2013 to -0.320% in 2014 and has remained negative ever since. In other words, it only had a short term effect. 

Complex social and economic factors intersect to shape fertility patterns. These are far beyond the purview of government control. High-income countries particularly witness a steep decline in fertility rates, possibly influenced by increased educational opportunities and changing societal expectations. Later marriage, postponed childbearing and an increase in single motherhood all emerge as trends, as a country’s income levels increase. 

We also see factors such as higher levels of education empowering women, and evolving cultural norms around marriage and career aspirations. This is particularly noticeable in the United States, which has decreased fertility rates among second-generation immigrants. 

Economic downturns, including a lack of affordable housing, also often prompt couples to delay having children, at least temporarily. This has been seen in the United States, where fertility rates have been declining since 2008. 

From a libertarian perspective, declining fertility rates are of concern. However, the question is whether governments should continue to spend money on costly pro-natalist policies. For example, is spending billions on childcare and paid parental leave preferable to allowing single income families to split their income for taxation purposes? Not likely. 

The government should concern itself with removing obstacles. By prioritising individual freedom and self-reliance, individuals would be encouraged and empowered to make their own decisions regarding their own family size, without government intrusion.

By promoting a culture of autonomy and self-reliance, libertarian solutions would address declining fertility rates while respecting individual liberties and preserving economic vitality.