South Korea, Japan, and China want women to have more babies. They’ve tried payments for new babies, subsidized education, and longer parental leave.
But nothing seems to work.
Low Birth Rates
Countries
During 2023, far below the replacement rate of 2.1, South Korea’s women had an average of .72 babies. Now down by 5.1%, Japan’s birth rate has sunk for eight consecutive years. Meanwhile China’s birth rate has also cascaded:
Sinking birth rates have a downside. Increasingly, there are an inadequate number of workers supporting retirees. Like China, the new demographic spills over into eldercare with not enough children to care for their frail parents. In addition, South Korea worries about its military shrinking. Ultimately and most crucially, a smaller work force can constrain economic growth.
Solutions
Still though, it’s tough to elevate a birth rate. So far South Korea has tried unsuccessfully. It did not work to offer a year’s parental leave to moms and dads with children younger than eight. Only 7% of the men took the leave while 70% of the women did. Hoping to reverse the trend, South Korea will increase payment for children under a year old from 300,000 won ($230) to 1 million won ($765). Similarly, the Japanese government will give $660 to every pregnant woman and, afterwards, babysitter discount coupons. In China, nine vocational schools even gave students a weeklong break during which they were supposed to “fall in love.”
At the same time, private firms have offered whopping stipends. One Korean firm is paying a 100 million Korean won ($75,000) baby bonus while China’s Trip.com offered 10,000 yuan ($1376) each year until a child reaches age 5 after the employee has been with the firm for three years. Hoping also to support mothers, in Japan, Itochu Corp. banned work after 8 pm.
Our Bottom Line: What Do Women Really Want?
The keys to boosting birth rates are more basic than financial band-aids. With many women wanting to combine work and the family, researchers suggest that a good welfare system, cheaper childcare, and more gender equality will elevate the number of babies. While their model is the Nordic countries, even there, birth rates have descended. (The following graph refers to fertility rates which the US government defines as births per 1,000 women aged 15–44):
I know I did not say what women want. But, as economists, as always we can return to tradeoffs. It needs to be worth the cost (defined as sacrifice) to be an employed mother.
Also, this article has some answers. Do take a look.
My sources and more: Thanks to Marginal Revolution for alerting me to South Korea’s low birth rate. From there, these articles, here, here, here, and here offered more detail.
