Families in all societies, including modern market-oriented societies, have been responsible for a sizable part of economic activity—half or more—for they have produced much of the consumption, education, health, and other human capital of the members.
– Gary Becker
The demographic future of the United States does not look bright. Whether you’re concerned about the fact that the share of children living in two-parent families has declined, how the average woman ends up having fewer kids than she desires, or the repercussions of population decline for economic growth, you probably recognize that below-replacement fertility rates are not the sign of a healthy society. Despite their crusty reputation, economists have thought deeply about the role of the family in society. At a time when Americans (and conservative intellectuals in particular) are increasingly interested in policies to support family life, the economic way of thinking has much to contribute to this important conversation.
Conservatives have recently set aside their natural wariness of government intervention to propose new “pro-family” welfare programs. A popular example of this is Senator Romney’s Family Security Act, which would redistribute hundreds of dollars each month to families with children. Other proposals include “wages” for stay-at-home parents and federally mandated paid leave programs. In post-Roe America, the search for ways to support families is more pressing than ever.
The Challenges of Pro-Family Policy
The problem is that there is very little evidence that these types of policies work. One recent research paper on the puzzle of falling U.S. birth rates noted: “The fact that the U.S. total fertility rate is now closer to other high-income countries, though generally still slightly higher, does not fit with the narrative that if the United States had more supportive government programs—such as subsidized childcare and generous paid work leave—its birth rates would be higher.” This is not to say that there are no good reasons why families should be supported by public funds, but that we must stay sober about what policy can and cannot achieve.
The grand sweep of history reveals that while governments are certainly capable of messing up their demographic futures, they are much less able to remedy demographic disasters. This peculiar asymmetry (on which I have written more here) is easiest to observe in autocratic states, like Soviet Russia, China, and Singapore. Each of these countries initiated their new regimes with anti-natal policies, such as increasing access to abortion, sterilization, divorce, and the infamous One Child Policy. However, each of these countries reversed course within two generations when they discovered their policies had been “too successful,” realizing that their social programs, economies, and national security would soon be in disarray due to impending demographic decline.
For example, although Soviet Russia introduced the honorary title of “Mother Heroine,” imposed fines for divorce, and began to pay women for having children, they could not raise birth rates (and the country remains in demographic crisis today). The story of Singapore is similar. When fertility fell below replacement in 1987 after decades of population control, the government introduced a battery of pro-natal policies under the banner “Have three, or more if you can afford it,” yet Singapore’s total fertility rate continued to fall, reaching just 1.2 in 2013. The jury is still out on China—which has recently introduced policies and propaganda to encourage parents to have more children—but its prospects do not look good.
From the perspective of family economics, the demographic policy asymmetry makes sense. There are many ways to prevent children from being born—from forced sterilizations to simply increasing the cost of having a child—but for the birth of a child to occur, many delicate and complex forces (such as the agreement between parents and biological timelines) must align. As leading reproductive biologist John Aitken points out in his recent book, The Infertility Trap, human fertility is not just a tap that can be turned off and on again. The cultural conditions and long-term vision necessary to foster an openness to children may be why religious organizations—not states—are much better at promoting fertility among their members.
Do No Harm
This is not to say that the U.S. government could do nothing to promote family life—quite the contrary. Decades of research have uncovered aspects of our current system that actively discourage family formation and fertility. The starting place for our pro-family policy reforms should be to “do no harm.”
A surprising number of government interventions artificially increase the time cost of children. This is significant because although certain costs associated with children have fallen (e.g., the cost of food, energy, and clothing), rising wages have meant that the opportunity cost of time has increased, especially for women. Harvard economist Claudia Goldin illustrates throughout her recent book, Career & Family, how modern life and workplace demands impose inflexible time requirements, which contribute to the gender wage gap, delayed marriage, and childlessness. Some examples of modern workplace challenges are career ladders in which men and women are expected to make large time investments in their twenties and thirties (peak fertility years). Furthermore, one line of research has found that the federal subsidy of college loans reduced fertility rates as it led to delayed marriage and greater debt burdens on young people than would otherwise be the case.
Given these demands, politicians should take care not to discourage industries that provide jobs with flexible hours and customizable schedules, such as those in the gig economy. For example, laws intended to protect gig workers in California would have actually stifled the unique benefits that attract workers to those industries. Moreover, surveys have repeatedly shown that women tend to prefer these kinds of jobs since they can be adjusted to the time demands of close relationships—whether with friends, spouses, children, or elderly relatives.
Families have always managed the large time cost of children by having a support system. Since not all families can live near their relatives, beloved nannies and housekeepers who are often low-skilled immigrants fill these roles as well. However, immigration restrictions make help around the home prohibitively costly for the average American family. Many women are left shouldering what amounts to multiple full-time jobs. In other words, one unintended consequence of having a restrictive immigration system is that household help is a luxury reserved for the ultra-wealthy few, rather than part of a natural network of social support. Another more recent aspect of this problem involves telework. In particular, removing legal barriers (such as tax penalties or licensing requirements) to earning income across state lines would free workers to live near extended family members, thus receiving more domestic support.
Second, child-abundant families are inadvertently punished by parts of our current regulatory, fiscal, and educational systems. For example, the strict regulation of childcare has raised prices without increasing quality, and safety regulations concerning children’s car seats are estimated to have resulted in 145,000 fewer births since 1980 for the simple reason that having a third child may require purchasing a whole new vehicle to fit the car seats.
Marriage does not fare much better. Recent research has shed light on the fact that the comprehensive United States fiscal system “taxes” marriage. Understandably, this “marriage tax” reduces the incentive to marry, especially among low-income individuals who face the highest rates (above 3 percent). The authors estimate that “for 25-year-old, low-income females with children, the marriage tax reduces their chances of being married ten years later by 7.52 percent.”
An important way that parents invest in their children is by educating them. However, the current educational system in the United States requires that families who choose religious education continue to fund the local public school as well. Given that religiosity is a strong predictor of fertility, this system harms those who are most likely to welcome children into their lives. The obvious solution here is school choice that does not discriminate against religious schools—a feature that many other countries already have and that recent Supreme Court cases might make more possible.
In conclusion, the way to promote family life is to embrace the interconnectedness, entrepreneurship, and long-term vision that a robust civil society and market economy engender. Making wise decisions about children today requires that couples think of themselves at age eighty, surrounded by grandchildren and family caregivers, instead of myopically at age thirty when they are surrounded by diapers (as Bryan Caplan points out in his book, Selfish Reasons to Have More Kids). The surest path for pro-family policy is to start by increasing economic freedom by simply removing existing barriers to marriage and family life.