Why do we have fewer children – and what to do about it?

If you are a parent and occasionally feel that there are not enough hours in the day for both the full-time job, the packed lunches, driving kids to handball, the Aula messages, cleaning, laundry, bedtime stories and maybe even a little family fun.

And you might also be a little out of breath at the prospect of working more and longer to keep the welfare state and the aging population afloat.
No wonder.

A new study from SDU Professor Pieter Vanhuysse shows that parents contribute 2 1/2 times more resources to society than non-parents, when you factor in all the time and money that parents invest in our future generation of citizens.

We asked him how it is that societies tax their own reproduction and what we can do about it?

Why are we having fewer children?

This is a large and wicked macro-social problem. So it has a whole host of causes. Some are to do with pollution in the environment and declining sperm quality. Other causes are more sociological, generational, cultural. For instance, nowadays many young people, because of environmental anxiety and rising labor market and life course insecurity, are ever more tempted to stay DINKs: double income, no kids.

But in my own work, I focus on two related things: (1) what our social models implicitly value and do not value and (2) what our policy models do wrong – even when they think they do things right.

After all, even in our notoriously family-friendly Nordic societies, fertility is going down. It’s even fallen off a cliff over the last decade in Finland.

 Our new research shows that parents in Europe chip in over two-and-a-half times more valuable resources overall than non-parents do. But most of these resources are hidden statistically and non-valued socially.

When looking just at public transfers (such as taxes and benefits in the welfare state), which are fully statistically visible, parents contribute somewhat less than non-parents. But, away from the statistical limelight, parents - and only parents - additionally provide very large extra transfers of time and money to their own children. So large, in fact, that they change the entire picture. 

Over the entire working life, the average parental/non-parental resources gap in Europe flips around, from 0.73 when measuring public transfers alone, to 2.66 when including all three transfer types.

What does this mean for societies?

Ultimately, it is about whether we can continue to reproduce our societies in a non-conflictual way over time - especially as we are already aging and greying.

As children grow up to become adult taxpayers, social security contributors, caregivers, and parents in their turn, children will finance future public goods and pensions and health care for all dependents in society – including non-parents.

Childrearing thus creates positive externalities. If societies do not fully acknowledge, let alone value, the real transfer cost of childrearing, they will end up producing too few productive adults.

This puts the intergenerational contract on which our society is based under severe strain. Our labor markets and welfare states could not continue to function well without the value produced by families.

Barring immigration or its more convenient version, selective ‘brain gain,’ on a politically wholly unrealistic scale today, the continuation of our social model depends on sustainable demographic reproduction.
This is a function of both the size (‘quantity’) and the capabilities (‘quality’) of successive generations.

Let’s be clear. Childrearing is not just an expensive private choice, like preferring champagne over beer. It also produces a socially necessary public good that we all rely upon later.

What does your study show about what can keep people from having more children?

When parents in Europe chip in more than two-and-a-half times more resources overall, this shows the sheer magnitude of the asymmetric cost-sharing in how societies continue over time. The large size of this ‘privatized’ hidden cost exclusively on the shoulders of parents will affect parenting decisions and lower fertility levels.

After all, the private resources parents give their children may be statistically less visible, but they are no less real. It is the cost of all the clothes and food and trips and camps and sports lessons. And it is the time spent cooking and cleaning and driving and caretaking and being emotionally available.

All of this, in addition to also working and paying taxes as a parent, just like non-parents.

The same time and money resources could have been spent otherwise, in more consumption or savings. 

So, it is no wonder that the young today aspire to becoming DINKs – even though this approach would be self-defeating if generalized. There would be no next generation to pay for, and care for, the DINKs generation in old age.

And it is no wonder that parents will think twice when considering whether to have that second or third child.

Even welfare states, like ours, that provide a few hundred euros more than others in family benefits, a few weeks more in parental leave and a few more IVF treatment rounds – they, too, fiddle at the margins. Such policies will not solve the larger, deeper social and cultural causes behind our declining or stubborn-low fertility levels.

Why aren't societies more family-friendly?

The macro-sociological answer is that even famously family-friendly societies actually do not fully value what families – and others who nurture human capabilities - really contribute.

The conceptual answer is that it is the statistical invisibility of the substantial time and money transfers involved in childrearing. Most of it is invisible in statistics and national accounts, and therefore not really on the radar of politicians and policymakers.

It is this invisibility that allows welfare states to free-ride on the cost of producing the next generation of workers and taxpayers. 

So, we need to be clearer about all it really takes to rear a child to a ‘quality’ adult who is productive, mentally healthy, and fiscally and socially responsible. About what it would really mean for a welfare state to be family-friendly.

The two countries in our 12-country European study that had the highest parental transfer load relative to nonparents were, paradoxically, our proudly family-friendly Nordic welfare states.

Nordic policies do help parents, let’s be clear. But they help them in a specific, narrow, productivist way: they help mothers work (which is what most mothers want). And then, they send mothers a large bill. The help is not a gift.

Nordic working mothers and fathers pay the same high levels of taxes and social security contributions as Nordic non-parents – and higher levels than parents in most of the rest of Europe. And when Nordic parents want to hire a babysitter or other childcare services for a few hours, they really must pay more for the same service than German or French parents.

What can politicians and society do about it?

Today, our social model and our social policies do not fully take into account, how the human and fiscal resources welfare states and labor markets tap into were created in the first place.

Our societies thus adhere to a second wrong ‘stork theory’ that needs debunking. Just like newborn infants are not delivered by storks but by their mothers, resource-productive new adults do not just drop fully-formed out of the sky either.

Rather, they are delivered to society after a further twenty-five years of child-rearing, financed to some degree by all taxpayers but to a larger degree by their own parents.

As I also argued in my closed expert meetings with European Commission Vice-President for Democracy and Demography Dubravka Suica, we need a much more holistic social investment paradigm shift.

We need a conceptually clearer view of the value created by parents and other carers. And we really need to think harder, and be more explicit, about what we really want to value as societies.

After all, a whole range of related, quite odd (non-)valuation practices are still widely used by our contemporary societies today. Take the widespread “motherhood penalties” and “carer penalties” in labor markets.

Mothers love their children and carers love their jobs. These, too, are presumably freely chosen pursuits. Yet making mothers and carers pay an earnings penalty is akin to freeriding on that love: a form of exploitation. This is neither just nor efficient.

World-leading care expert Nancy Folbre put it memorably:

"When societies take prisoners of love, it does not benefit them in the long run. This is an unsustainable social valuation model. For not fully valuing quality care will in the end lead to less quality caregiving in our society: fewer good nurses, fewer good teachers, fewer good parents.

Folbre also recently picked up our research groups metaphor and wrote: "It is self-defeating for societies to tax the stork."

And what about the politicians?

Many activities with positive externalities, such as charitable donations, private savings or investments in green technologies, are awarded tax credits today.

But when parents produce positive externalities, instead of receiving tax credits, they shoulder a significant extra resource contribution load – as if societies implicitly tax childrearing, rather than subsidizing it. This, too, is an unsustainable social valuation model.

So we need to move away from short-term utilitarian approaches like IVF subsidies and other fertility incentives, all the while telling parents to pick up their kids later from school and making public schooling more ‘cost-efficient’. This is fiddling at the margins.

Wide across Europe, parents have significantly fewer children than they’d wish. Europe has, for a while now, grappled not just with fertility rates well below replacement level but also with high or still-increasing levels of childlessness.

Yet despite rising demographic tensions, societies unwittingly tax their own reproduction.

To secure the future foundations of our social model, we need to make our currently heavily elderly-oriented welfare states more intergenerationally balanced and much more human capability-oriented.

For despite its name and its quarter-century old track record, the “social investment paradigm” is actually still very incomplete. We need more extensive policy models to better assist, value and incentivize quality in the work of parents, carers and educators – those who nurture the human capabilities that will later sustain us all.

How long will it take to fix the problem?

That all depends on how seriously we take the paradigm shift. Population processes are a bit like elephants. They generally move along slowly, but they can also sprint fast - when given the right signals. In the end, we do need to rethink more explicitly what we really want to value in our aging societies.