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Birthrate funding: Throwing money at the problem of declining birthrates

While countries invest in improving families’ financial security and fertility treatments, the solution to declining birth rates may be more nuanced and complex.

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Quantumrun Foresight
June 22, 2023

Insight highlights

In response to low fertility rates, countries like Hungary, Poland, Japan, and China have introduced benefits policies to stimulate population growth. While these financial incentives may temporarily boost birth rates, critics argue that they could pressure families into having children they can't support in the long run and may not address the root of the problem: socio-cultural and economic situations that discourage childbearing. A holistic approach—such as supporting women to balance work and personal life, providing opportunities for people who lack them, investing in education, and integrating women and immigrants into the workforce—may be more effective in reversing declining birth rates.

Birthrate funding context

In Hungary, the fertility rate reached an all-time low of 1.23 in 2011 and remained well below the level of 2.1, which is required for population levels to remain constant even in 2022. In response, the Hungarian government introduced nationalized IVF clinics offering women free treatment cycles. In addition, the country also implemented various loans that offered money upfront, based on a future promise to have children. For example, one type of loan provides approximately $26,700 to young married couples.

Multiple national governments have enacted similar monetary policies. In Poland, the government introduced a policy in 2016 under which mothers received approx. $105 per child per month from the second child onwards, which was expanded to include all children in 2019. While Japan has also enacted similar policies and successfully arrested the declining birth rate, it has not been able to raise it significantly. For instance, Japan recorded a record-low fertility rate of 1.26 in 2005, which has risen to only 1.3 in 2021.

Meanwhile, in China, the government has tried to raise the birth rate by investing in IVF treatments and instituting aggressive stances against abortion. (At least 9.5 million abortions were carried out between 2015 to 2019 in China, according to a 2021 report.) In 2022, the country’s national health commission pledged to make fertility treatments more accessible. The government aimed to enhance public awareness about IVF and fertility treatments through reproductive health education campaigns while also preventing unintended pregnancies and reducing abortions that were not medically necessary. The Chinese government’s updated guidelines marked the most comprehensive effort at a national level to improve birth rates seen as of 2022.

Disruptive impact

While helping families to become financially stable through loans and financial assistance may have some benefits, there might be a need for holistic changes to socio-cultural and economic situations to encourage significant changes to the birthrate. For example, ensuring women can return to the workforce may be vital. Since young women have a university education and want to work, government policies that encourage women to balance work and personal life may be necessary to boost birth rates. Moreover, studies show that poorer families have more children than richer families, which may mean that boosting birthrates may be about more than financial security.

The other problem with the policies providing financial loans and assistance to families is that they can encourage families to produce babies that they cannot sustain long-term. For instance, the upfront payments in the Hungarian system put pressure on women to have children they may no longer want, and the couples who take out the loan and then get divorced have to pay back the whole amount within 120 days.

Conversely, countries may see increased success by focusing not on changing people’s minds about marriage or kids but on helping those who lack opportunities. Holding events for rural communities to meet potential partners, health insurance coverage of expensive IVF treatments, investing in education, keeping people in jobs for longer, and integrating women and immigrants to top up the workforce may be the future for dealing with declining birth rates.

Applications for birthrate funding

Wider implications of birthrate funding may include:

Increase in demand for fertility treatment doctors, professionals, and equipment, alongside government and employer subsidies for such treatments.

Governments investing in maternity leave policies to increase workplace diversity and inclusivity.

More governments taking a looser and more positive approach toward immigration to supplement their shrinking workforce.

Rise of government- and employer-sponsored daycare centers and childcare services to encourage families with children to join the workforce.

Evolving cultural norms that promote the social value of parents and parenting. Government benefits will more favorably benefit couples over single citizens.

Increased public and private sector investments in novel longevity treatments and workplace automation technologies to both extend the working lives of existing workers, as well as supplement the productivity of a shrinking workforce.