Paying People to Have Kids, Part Deux

Written by dad - 3 Comments

Did you know that the Australian government is paying people to have babies? In an attempt to increase their birth rate, they’re paying mothers a one-time bonus of $4,000 following the birth of their children (the bonus will increase to $5,000 in July 2008).

According to a local economic expert, however, this plan isn’t being applied in a very efficient manner — they’re paying mothers the same amount for every child, including the first one, yet many people would have had that child anyway. Beyond this, Australia’s not actually at risk of a declining population size, which makes this policy all the more curious.

As odd as this all might sound, Australia isn’t alone. In fact, Singapore has a similar payment scheme. I’ve also written about Korean companies that are offering incentives to couples that have kids, and of course the Child Tax Credit here in the United States.

Is it just me, or is there something sort of whack with all of this? Don’t get me wrong, we’re obviously not against large families, but… We had our kids because we wanted them, not because someone was paying us or offering incentives.

[Source: News.com.au]

Published on April 19th, 2007 - 3 Comments
Filed under: Money
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Comments (scroll down to add your own):

  1. I doubt that a one-time $5000 payment would turn having a kid into a net financial gain. I would think that this is targeted at people who want more kids but don’t think that they can afford them.

    Comment by Michael — Apr 19th 2007 @ 5:48 pm
  2. I have read that the government payout for children actually does not improve the fertility rate according to studies. (Canada also has some tax benefits for children – Canadian Child Tax Benefit.)

    Many countries are looking at future population issues as their fertility rate is below the level of replacement (2.1/woman).

    Comment by RootAnn — Apr 26th 2007 @ 10:41 am
  3. The government makes a payment to parents for each child they have (as the article states, currently AUD$4133. This payment is the same regardless of whether it is a first child, second child, etc.

    Intiuitively thinking, it might make sense for the government to not make any payment for a first child, since lots of couples will have that one regardless. Further, it might intuitively make sense to increase the payment for additional children. So, the payment would be nothing for the first child, $4000 for a second child, and $8000 for a third child, since it is these additional children you want to encourage.

    However, the government’s aim is to increase lifetime fertility, and the greatest determinant of lifetime fertility is the age of the mother when she has her first child. The payment means that a woman who would previously have had her first child at 28 may now have it at 25. This makes her much more likely to have a third child.

    I am an economist working for the Australian government, and while this isn’t the government’s explicit policy (lowering the age of mothers having their first child), it is how the numbers actually work out.

    Comment by Anon — Jul 24th 2007 @ 9:22 pm

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