Friday, November 03, 2006

Pro-natalism that Works ... Evidence from Estonia?

Recently, many commenters here on DM has flagged the idea of pro-natalism (rather sloppy Wiki.Pedia article!) as a possible working solution for countries with low (lowest-low) fertility and more specifically lamented the absence of talk about this in the entries posted here at DM. This is consequently to make amends on this and to present some of the arguments pro and con pro-natalism as we have discussed them in the comments sections on various posts. Before we do this though let us look at a country in Eastern Europe with low fertility where pro-natalism actually seems to have worked at least given the initial evidence (hat tip to Stirling for pointing towards Estonia in the comments on a previous post). Lastly, before we dig into the description of Estonia it might usefull for you to acquaint yourself with the general demographic situation in Eastern Europe and more specifically EU-8 (the lynx economies). To that end, this post from my blog has some good initial references and description.

(From the WSJ; reproduced by Post.Gazette.com, actually an excellent article!)

Estonia's wake-up call came in 2001, when the United Nations' annual world-population report showed that Estonia was one of the fastest-shrinking nations on earth, at risk of losing nearly half its 1.4 million people by mid-century. Estonia's fertility rate -- the average number of children a woman bears -- had collapsed to 1.3 in the late 1990s, down from 2.2 under communism only a decade earlier.

In an attempt to stop that downward spiral, Estonia took a bold step: In 2004 it began paying women to have babies. Working women who take time off after giving birth get their entire monthly income for up to 15 months, up to a ceiling of $1,560. Non-wage-earners get $200 a month. The welfare perk -- known locally as the "mother's salary" -- was a sharp about-face for the radically free-market government.

"Step by step, (the declining birthrate) became a danger to the survival of the nation, so we had to do something," says Paul-Eerik Rummo, minister for population affairs and a member of the Reform Party in Estonia's ruling coalition.

Now, two years into the program, the government is seeing some of the first tentative results. Since the adoption of the new benefits, Estonia's fertility rate has improved to 1.5. That's still below the 2.1 children needed to stop the population from shrinking (one child to replace each parent, plus some room to allow for child mortality). And it will take years to see the full impact of the mother's salary. But the apparent early success has inspired the government to look at other ways of getting people to have more children -- everything from subsidies for nannies to linking pension payments to the number of children one has.

This actually seems very positive and here at DM where dooming and glooming about the effects of declining population is the traditional and should I say natural menu we should indeed be optimistic here ... well done Estonia! However, what about other countries then and generally what would the initial outlook be for implementing pro-natalism as a general measure? This brings us to the point about my entry ... the pros and cons of pro-natalism and more importantly the issues to watch out for.

(Note that I am cruising on an intuitive level here since I have no formal textbook list of this; I hope the comments can help formalize this discussion)

Pros of pro-natalism

A Direct Measure - To the extent that fertility is a one of the biggest and most decisive factors in the demographic transition occuring in developed and semi-developed countries pro-natalism represents a very clear and direct valve by which to leverage policies to amend and affect the demographic situation.

A Direct Transmission Mechanism - Following the point above pro-natalism also consequently has the potential to display a very direct and effective transmission effect from the enacted policies and to the real effects on the demographic situation. This is of course a relative point since none of this would happen from one year to another (more about that below).

Cons of pro-natalism

Pro-natalism Costs - Pro-natalist measures are essentially behavioural fiscal measures in terms of public budget policy and as such they have a negative effect on a country's budget. This is of course pretty simple but as Edward has never tired of mentioning it is a crucial point to remember. We could think of this in terms of windows of opportunities. In order for pro-natalist measures to have a real effect and crucially to be fiscally sustainable they have to be enacted at a time where the society is actually capable of supporting the costs. As such pro-natalism cannot be enacted as a last-minute solution. Think about some of the developed countries really facing a dire demographic situation (Italy, Japan, and Germany) and take a look at the fiscal situation ... suddenly pro-natalism becomes a chance gone begging I would argue.

Pro-natalism is Counterproductive - Now I am borderlining on circular-reasoning I know since this is exactly what we want; that is pro-natalism should in fact be counterproductive to the trend of the quantum and tempo effect of declining fertility. However, this is still a real issue here and as I have argued in the comments sections of previous posts pro-natalism directed at the quantum effect alone is not a viable solution, particular not in developed countries where the female workforce is highly educated. The cost of making them sacrifice emancipation and sustained labour force participation in order to carry more children will be unrealistically high in many cases. In terms of the tempo effect this would more sense as a point of departure since inciting women to have children earlier would also have a lagged effect on the quantum effect. Moreover, addressing the tempo effect also has implications for the biological optimuum age for carrying children (Edward can add substantially to this).

Pro-natalism needs to be sustained - This is more an issue to watch out for than an actual 'con' but it is clear that any pro-natalist measure needs to be sustained over a given period of time or in demographic terms over several cohorts. A mere blip on the radar will not do and in short pro-natalism needs, to some extent at least, to be institutionalized as a structural mechanism. Why is this important? This is important because the very issue we are trying to combat (low fertility) itself is a structural and institutionalized trend in the developed world as a result of increased female labour participation and birth postponement operationalized more accurately through the quatum and tempo effect of fertility.

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This was a first attempt to try to conceptualize the idea of pro-natalism here on DM and if there is one thing I wish you should take away from this it is that making pro-natalism to work is not a straightforward issue. In fact, as we dig deeper into the issues the waters get increasingly more murky and muddier. This is not to say though that we should not consider it and for the reasons mentioned above this remains one of the most potentially effective measures we have to reverse the demographic decline in many countries.

8 comments:

Estonia in World Media (Rus) said...

I think perhaps it also should be mentioned that as measure PN is likely to be popular and as such sustainable. Unlike, say, childlessness tax (better word in English?) that for example USSR used to have.

Randy said...

There are also apparently differences between ethnic Estonian and Russophone fertility behaviours, the former tending more towards the patterns of Estonia's Nordic neighbours. No hard data that I've on hand, alas.

S.M. Stirling said...

Having children doesn't necessarily mean sacrificing participation in the labor force, or other positive features of modern life.

My mother had 4 children wasn't exactly a beaten-down drudge. I see dozens of parents here in Santa Fe every day with 3, 4 or more children, and they don't seem notably miserable.

There's an odd tone here sometimes, as if having children, or more than one, was somehow "icky" and inherently distasteful.

What having children does mean is sacrificing other satisfactions. You're giving up time and money that might be used for other things.

Pro-natalist measures simply recognize that this choice is of benefit to society as a whole, as well as to the individuals or couples concerned.

It's an essential form of capital creation for society's viability.

As for saying that they're unaffordable... this is precisely equivalent to saying that there's no chance of long-range survival for the countries concerned.

If fertility rates remain below replacement population _will_ drop at an ever-accelerating rate -- geometric decrease works the same way as geometric increase -- and the consequences are predictably disasterous.

Assistant Village Idiot said...

I am wondering if adoption subsidies might also work well. Even at school age, adopted children acculturate more rapidly than immigrants

von said...

One might wish to consider eliminating some anti-child and anti-stay-at-home-mother policies. For example in the US; if you were to divide the income of a parent or parents by the number of people that they are supporting, and then tax it. So a father supporting a wife and six children would have his income divided by 8 before it was taxed.
This would encourage stable families and children.

Anonymous said...

Ethnicially homogenous countries with very low fertility rates should definitely be adopting pro-natalist policies.

Japan and Italy are prime candidates.

However in multicutural countries like the US such policies are likely to be more problematic.

Low fertility ethnic groups will see pro-natalist welfare policies as transfers of wealth from one ethnic group from another.

In multicultural countries tax incentives might be more politically palatable than welfare incentives.

Janet Baker said...

To S.M.Stirling:

You said,
As for saying that they're unaffordable... this is precisely equivalent to saying that there's no chance of long-range survival for the countries concerned.

Yes, it is! It is saying the chance for their survival lay in the past, when they had the money to catch up, and they missed it. We could recognize that, and tell it as a cautionary tale to those countries which still have money to spend above just keeping their existing populations fed.

In our stimulus budget, notice there's money for birth control, and abortion and 'increased education' rather than for measures that would stimulate US birth rates, which have already fallen in the current crisis, if abortion figures can be counted as a measure (they are up about thirty percent, according to a small survey from a southern state, I forget which one).

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