Thursday, January 25, 2007

Welfare hurts families and creates a fertility crisis

Today's article from the von Mises institute provides some devastating empirical data that shows how fertility rates throughout Europe have plummeted as welfare payments have risen.

Some readers may stumble at the thought, and not see a direct relation between welfare and the number of children that a country produces. In fact, many of our political elites, social workers and journalists often claim that the very intention of welfare is to help out families, and to help them raise children. Well .. if only good intentions were enough !

Unfortunately, the results speak for themselves. The more socialist a country is, and the larger its social security taxes are, then far less people decide to have children.

In contrast, past communist countries, where the family was humiliated and disgraced to the utmost, go to the very bottom: some have fertility rates as low as 1.17 (Ukraine), 1.20 (Lithuania) and 1.21 (Czech Republic).

One can also look at differences among the developed Western countries. Among these countries, there are practically no differences in infant mortality rates, female labor force participation rates, and other standard explanations of the fertility decline. Yet total fertility rates differ widely — and exactly in the way predicted by the size of social security systems. The United States has a fertility rate of 2.09, whereas the European Union has an average of 1.47.

Below is a graph, of Total fertility rates (Y-axis) and social security taxes as percentage of GDP (X-axis) in 104 countries in 1997. Source: Michele Boldrin, Mariacristina De Nardi and Larry E. Jones, "Fertility and Social Security," NBER Working Paper No. 11146, 2005.