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Awkward Truth: Subsidizing Women’s Work Drives Down Birthrates

Washington Examiner

April 23, 2024

Birthrates are low and falling in the United States, and commentators and policymakers are starting to realize this is a problem.

It’s tempting to assume that this is about affordability: People aren’t getting married and having children because they can’t afford it! This is partly true, and so it’s partly true that we can drive up birthrates by giving money to would-be parents.

But there are a hundred caveats to the notion that cash transfers drive up birthrates. Some subsidies encourage family formation and some encourage particularly unwed births. Some speed up births, but they don’t appear to increase the number of births. Others have no effect on birthrates.

The simple lesson from all the available data is this:

To help people have more children, just give them cash, either unconditionally or on the condition of having children. Any other effort to subsidize families, such as subsidizing work or subsidizing child care, has no effect, a tiny effect, or even a negative effect on family formation.

A new study out of Finland reaffirms this general rule in a very specific way. The Finnish government randomly awarded work subsidies to men and women. The finding is a bit awkward in these days of gender equity: If you subsidize work for men, birthrates go up. If you subsidize work for women, birthrates go down.

Check out these two charts highlighted by demographer Lyman Stone.

This first chart shows that men who randomly received the work subsidy were more likely to have babies than the men who didn’t receive work subsidies. This is what the standard media account would assume: Increase men’s wages, and they have more children.

The second chart shows something more interesting.

Women receiving work subsidies became less likely to have children.

Why would that be? Well, subsidizing work does two things: It increases one’s income, and it also increases one’s likelihood to work.

  1. When you have more money, it’s easier to have more children.
  2. When you work more — if you are a woman, at least — it’s harder to have more children.

On net, subsidizing work for women drives down birthrates.

This has implications beyond this unique and complicated Finnish subsidy.

First, this study further undermines an argument that was very popular in Europe and the U.S. for the first 20 years of this century:

If we support women working, then they will have more children. A headline in the Guardian declared: “France’s baby boom secret: Get women into work and ditch rigid family norms.”

Countries that have had a feminist revolution have the highest birth rates,” wrote David Willetts, a former British minister of state for universities and science.

New York Times columnist Michelle Goldberg argued that “in countries that support working mothers, like Sweden, Denmark, Norway and France, birthrates are basically fine.”

Well, this Finland study ought to destroy any remnants of this old “Feminist Fecundity.”

Here’s another way this Finnish experiment ought to inform our family policy: Work subsidies and family subsidies should be separated.

Separating work subsidies from family subsidies was one aim of Sens. Mitt Romney (R-UT) and Steve Daines (R-MT) in their bill to expand the child tax credit.

The earned income tax credit blends work incentives with family subsidies. Romney and Daines would end that.

Some people really benefit from work subsidies — mostly men. The universe of underemployed and unemployed men in the U.S. includes a lot of unmarried men who feel pointless and are discouraged — many of them have simply dropped out of the labor force. These men seem like the optimal target of work subsidies.

And as Finland shows, married men also seem to benefit from employment subsidies — they make more money, have more children, and likely work more.

Single women also benefit from work subsidies — and this probably includes single mothers.

Married mothers, on the other hand, could probably most use family subsidies — or just straight cash.