India became the world’s most populous country last year as China joined much of the rich world facing declining populations. Whilst overpopulation has its own issues in a resource constrained planet, declining populations have had adverse social and economic issues across countries. “…as a country’s population grows more top-heavy, a smaller, younger generation bears the increasing costs of caring for a larger, older one.” In particular, given China’s positioning over the past four decades as the factory to the world, its declining working population and the resulting rise in wages has implications on the global macroeconomic situation, especially the current sustained trend in inflation.
Clearly, China recognises the adverse impact of this. In 2016, they discontinued the one child policy which was in force for decades. But that hasn’t helped arrest the decline either. So what can China learn from elsewhere in the world where policies have been in place to address this?
Whilst countries such as US, UK and Germany have used immigration as a means to support population growth, the article looks at experiences of Australia, Hungary and Sweden which have had policies to boost fertility rates:
“Two decades ago, Australia tried a “baby bonus” program that paid the equivalent of nearly 6,000 U.S. dollars a child at its peak. At the time the campaign started in 2004, the country’s fertility rate was around 1.8 children per woman. (For most developed nations, a fertility rate of 2.1 is the minimum needed for the population to remain steady without immigration.) By 2008, the rate had risen to a high of around 2, but by 2020, six years after the program had ended, it was at 1.6 — lower than when the cash payments were first introduced.
…Sweden is often cited as a model for increasing fertility rates, thanks to a government-boosted jump in its birthrate. After introducing nine months of parental leave in the 1970s and implementing a “speed premium” in 1980 (which incentivized mothers to have multiple children within a set period), Sweden saw fertility rise from around 1.6 early in the decade to a peak just above the replacement rate by 1990. (The country has since increased its parental leave to 16 months, among the highest in the world.)
After that uptick, however, Sweden’s birthrate fell through the ’90s. Over the last 50 years, its fertility rate has fluctuated significantly, rising roughly in tandem with economic booms. And while the country still has one of the highest fertility rates among the most advanced economies, over the past decade it has followed a trajectory similar to that of most developed nations: down.
Recent research suggests a reason Sweden’s fertility spikes were only temporary: Families rushed to have children they were already planning to have. Stuart Gietel-Basten, a demographer at the Hong Kong University of Science and Technology, said financial incentives seldom increase the overall number of children born, but instead encourage families to take advantage of benefits that may not last. The spikes, he added, can have unforeseen consequences. “When you have 50,000 children born one year, 100,000 the next, and then 50,000 the year after that, it is really bad for planning and education,” he said.
Few countries have embraced pronatalist policies as vigorously as Hungary, whose right-wing populist leader, Viktor Orban, is dedicating 5 percent of the nation’s G.D.P. toward increasing birthrates. The government encourages procreation through generous loans that become gifts upon the birth of multiple children, tax forgiveness for mothers who have three children, and free fertility treatments.
Around the time these efforts began under Mr. Orban in 2010, Hungary’s fertility rate was just over 1.2, among the lowest in Europe. Over the 2010s, that rate climbed to around 1.6 — a modest improvement at a high cost.
It remains to be seen how far China will go to stem its decline in population, which was set in motion when the country’s fertility rate began to plummet decades ago. That drop began even before the country’s family planning policies limiting most families to a single child, introduced in 1979. Those who defied the rules were punished with fines and even forced abortions.
The official end of Beijing’s one-child policy in 2016, however, has not led to a rise in births, despite cash incentives and tax cuts for parents. The country’s fertility rate rose slightly around that time, but has fallen since, according to data from the United Nations: from around 1.7 children per woman, on par with Australia and Britain, to around 1.2, among the lowest in the world.”
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