In February 2025, South Korea announced the first increase in its fertility rate in many years. The fertility rate — an estimate of the total expected births per woman over her lifetime — has been falling in that country for decades. As of 2023, it was 0.72, versus 3.43 in 1975. Between 2023 and 2024, there was a small tick upward, to 0.75. One possible factor in that rise is increased payments to families for new babies.
What’s happening in South Korea is on the extreme end of a broader global trend. The number of births per woman has been declining globally. Many countries have fertility rates below replacement, meaning that the population is expected to shrink, in some cases very fast. (The replacement fertility rate, if we wanted to keep the population at the same level globally, is around 2.1 births per woman.)
This decline has worried many people, as we look to a future with fewer children, more older people, and smaller populations overall. (Not everyone is worried about this — I covered the broader issue in an episode of Raising Parents.)
To the extent that policymakers are worried about declining fertility rates and would like to stem or reverse the decline, a core set of policies they consider are related to better family support. How much would it matter if we made it easier to have kids, and what would those policies look like? More child care? More family leave? What if we just straight up paid people to have children? Would that increase the fertility rate? The first set of questions are especially salient in the U.S., where there is no universal paid family leave, and child care is a mess.
Whether such policies work, though, is a question for data. So: what does the data say? Can you essentially pay for more babies?
How much do family-friendly policies matter?
Before getting into the data — and nerding out a bit on statistical methods — I want to give a reality check about how much these policies might matter. The graph below shows total fertility rates over time in the U.S., Norway, Sweden, and Canada. Norway and Sweden are countries with clearly excellent family supports. The U.S. has more limited family supports. Canada is somewhere in the middle.
Despite the variation in family support, fertility rates have consistently declined across all four of these countries. In fact, in 2022 the U.S. had the highest fertility rate.
I start with this information to set expectations for the possible effect sizes for the kind of supports we think about here. Fertility rates are going down even in places with excellent family support, so while that doesn’t exclude the possibility that changes in these factors matter, it does suggest limits on their impact.
How do we learn about a policy’s impacts?
One way to study the impact of child care subsidies on fertility rates would be to compare countries (or perhaps states) with different child care subsidy levels at a single point in time and look at the differences in their fertility rates. It would be difficult to draw causal conclusions from this type of analysis; there are many other factors that could differ across locations that might drive fertility rates.
Instead, the best studies of these questions rely on more sophisticated data analyses. In many cases, that means using changes in policies within an area. Imagine that a country or state introduces a new child care benefit. Researchers can look at how fertility changes after this is introduced and compare those changes to a similar location without a change in subsidies. Some policy changes also only apply to births to some groups of people (for example, some countries pay parents for a birth but only for third or later children). In those cases, researchers can ask whether fertility changes more for the groups that received subsidies.
The gold standard for causality would be a “randomized experiment” — in this case, we could imagine choosing a random set of women to offer paid leave to, or randomly choosing another group to get a cash subsidy. By comparing these groups to groups without these offers, we could draw conclusions about the impacts of the policy. Such experiments are generally not possible, but looking at changes in behavior when policies change is the next best thing.
What kinds of family-friendly policies can we study?
The approach above — looking at changes in policies over time — lets researchers study two kinds of family support policies. First, they can study policies like child care subsidies and parental leave extensions, which are focused on supporting specific needs of families. Second, they can study a smaller number of policies that provide direct cash payments to families when they have children.
Examples of the latter group of policies include policies in Israel that pay varying amounts depending on the birth order of the child (higher payments for more children) and large payments (over $10,000) for births in Russia. South Korea pays $770 per month for children under 1, and has discussed extending this to much larger amounts.
From an economist’s standpoint, policies that pay for birth are very similar to policies that subsidize child care. Both effectively provide additional income to families, so in theory they should have similar impacts. In practice, it is possible that parents view these supports differently, and may therefore react differently.
What does the evidence say?
There are a large number of individual papers about particular policies, with varying results. It seems clear that these policies can have some impact, but it’s not consistently large and it varies across locations.
For example, a 2020 paper reports on a policy beginning in 2007 in Russia that paid families approximately $10,000 at the time of the birth of a second or later child. This was equivalent to 18 months of wages for an average individual — in other words, a lot of money. The authors find large increases in the fertility rate: more than 20% in the long run. That’s a very big impact, although the policy was expensive.
On the other hand, a paper looking at a policy in the 1970s in Canada that also paid a sizable amount for children showed only a short-term increase in the fertility rate. People had children closer together but did not have more of them.
There are more papers, from more countries, going in various directions. A 2021 summary paper does an excellent job of bringing this work together. Here’s what it finds:
- Expanding child care or lowering child care costs increases the fertility rate. In terms of magnitude, a percentage point increase in child care coverage led to between a 0.2% and 1% increase in fertility rate (it varied across studies).
- Paid maternity leave increases the fertility rate. Here, we can see this in U.S. data. When the Family and Medical Leave Act provided 12 weeks of unpaid leave beginning in 1993, the probability of a first birth increased by 1.5% annually. Other countries’ data shows increases as well.
- Monetary transfers to parents at the time of birth are inconclusive. These payments seem to increase births in the short term, but it is difficult to know whether these increases are sustained. Still, these increases can be large, such as the response in Russia noted above.
- Fertility rates are increased when insurance covers fertility services. One paper from the U.S. estimated that births increased by 32% when fertility treatments were covered by insurance.
Closing thoughts
For me, there are two big takeaways here.
If we are looking for a policy answer to why global fertility rates have declined, these are not it. The global fertility declines are so large and so widespread that these policy effects are not sufficient enough to explain them.
Second: there is evidence that policies that support families increase fertility rates. The evidence is strongest for direct policies — providing child care, paid maternity leave, and fertility services. Paying directly for births also shows some impacts, but as the authors of the summary paper note, the effects may be short-lived.
As I’ve written about before, there are many reasons to support these policies. They are good for infant health, parents’ earnings, and gender equality. Concerns about global declines in fertility rate are just another reason.
The bottom line
- Despite variations in family support across countries, fertility rates have consistently declined globally (even in places with excellent family support).
- There is evidence that policies that support families increase fertility rates, particularly direct policies (providing child care, paid maternity leave, and fertility services). However, the impact is not consistently large and it varies across locations.
- Overall, while these policies are worthwhile, there is not direct evidence that they will have a global impact.
Log in
I have one kid and would love to have a second, but the combination of financial impact and biology means we will be a one kid family…I had my first at 38 and it took four years to be in a financial position to consider another childcare bill (not to mention the cost of the needed fertility treatment, since I am a solo parent by choice) at which point biology intervened and a second child isn’t going to happen. If I won the lottery, sure, I’d have another kid tomorrow, but when you factor in the cost of conception (£10-15,000 per kid), the lost income from my maternity leave (six months of my salary), and the childcare costs (roughly £100,000 to get one kid to school age and then £7-10,000 per kid per year after that for at least a decade), I suspect the reason these policies don’t move the birth rate is because they don’t come close to touching the financial cost of having more kids (to say nothing of how punishingly exhausting it is to work a full time demanding job, commute, parent, and run a household).
I was a little surprised that this article didn’t include at least some mention of the question: Even if we can incentivize people to have more kids – should we? The world population has gone from about 3 billion in 1960 to 8 billion now. I know there are some medium-term impacts like supporting an aging population – but the long-term effects of continued population growth while we careen towards food and energy shortages seems like that might be a problem also?
I love my kid, but am ultimately very grateful for the many people who choose not to have their own children – people like aunties and close friends who are keen to babysit because they have the mental energy to do so. Yes, these people will need a support plan as they age other than their own children, but it seems like something we should be able to do as a society for people who paid taxes towards education and children’s programs their whole life but never used them.
I wonder if there are studies being prepared to check the impact of Vermont’s new payroll tax to subsidize child care. I feel like it’s something that could be replicated in other states in the future!
This suggests to me that, in a vacuum, these policies should yield a net zero or net positive fertility rate. Since they do not — since they yield net negative fertility rates — I’d imagine the negative X factor superseding the positive effects of these policies has nothing whatsoever to do with family-building support; I’m thinking about things like climate change, gun violence, and increased value placed on mental health and avoiding overwhelm.
Rob Henderson had a post recently that showed that the fertility rate has not declined in married couples. The decrease in fertility rates is potentially caused by a decrease in marriage rates. He proposed paying people to instead get married and also having married parents is so good for kids too. Would love to get Oster’s thoughts.
For me, these discussions miss the point. I have two kids and could afford more but there is no amount of money in the world that would entice me to do that. Thankfully, my (fully involved) husband agrees. Raising children well is incredibly difficult and demanding, it’s about so much more than money (though I understand there is a base level where money really does matter). I would, however, welcome any policy that lessens the enormous sacrifices parents – and women especially – make for having children. And any policy that could lessen my permanent parental brain-fry would be welcomed too.