Monetary incentives do not appear to work in changing fertility rates. Time to look at other solutions
In facing the challenge of declining birth rates and demographic decline, a sense of helplessness often pervades us. Population scholars teach us that demography is a slow process but with an overwhelming inertial force: once a demographic trend is set in motion, it is difficult to reversible. Today we are witnessing a trend of declining birthrates which substantially affects all developed nations and if we look at fertility rates the differences between nations such as France and Sweden which have worked harder to implement family policies that are up to the challenge (fertility rates of 1.86 and 1.66 respectively) and the countries that are culpably late on this front as Italy certainly is (rate stuck at 1.24), are limited to a few decimal points (still sufficient to move from a gentle decline to a precipice). Without considering the extreme case of Singapore which, despite having the most generous birth policies in all of Asia, is stuck at a fertility rate of 1.1.
The traditional avenues of family policies that in one way or another revolve around cash transfers (tax deductions, family allowances) or direct provision of goods and services (free nursery, parental leave) seem ineffective. Perhaps the time has come to identify bolder policies, which are not limited to making the choice to have children less expensive, but rather are structural reforms aimed at modifying institutional structures, to promote an environment conducive to demographic growth and family prosperity. A scientific article by demographer Paul Demeny, published in 1986 with the title Pronatalist Policies for Low Fertility Countries, posed these same questions in an innovative way. Trying to keep himself equally distant from the dangers of a certain utopian radicalism and extreme welfarism, Demeny puts four radical proposals on the table, which go beyond the approach of merely reducing the cost of having children and put the family back at the center of the birth issue, whose social role must be vigorously recovered after decades of marginalization. Only strong and stable families – according to Demeny – are able to reverse the negative demographic trends that are overwhelming the entire developed world.
A first proposal, which certainly also resonates in the discussion on the Woman Option in the Nadef presented in recent days, is to parameterize future pension benefits to current fertility choices. In the scientific literature, the connection between the adoption of a universal pension system and the reduction of fertility rates has often been studied. The basic thesis is that without a pension system, workers generate children also as a form of self-insurance for the times in which they will no longer be able to work, while in the presence of a universal pay-as-you-go pension system, like the Italian one, children generated today will be the taxpayers who will pay tomorrow’s pensions even to those who decide not to have children today. In short, economists would talk about future pension benefits that are public and non-excludable against the costs of raising children that remain private; hence the problem of underproduction typical of public goods.
Demeny’s idea of pegging future pension benefits to current fertility choices would realign current costs with future benefits and, therefore, induce optimal fertility choices. As already mentioned, Demeny’s proposal has already had some faint echoes in public choices. Let’s think about the recent discussion on the possibility of reducing pension requirements for women who have had children, envisaged by Opzione Donna. With respect to this initiative, Demeny’s intuition suggests not looking at past fertility choices, which can no longer be influenced, but at future choices, with a view to future pensions. Furthermore, fertility choices affect both parents, therefore the incentive should be offered to both, in exchange for a long-lasting commitment over time with respect to raising children. This perspective saves public finances in the immediate future, because no incentives need to be spent, because if the incentive is effective, higher fertility will allow the pension system to be supported.
Another proposal for which Demeny’s article has become famous concerns the idea of making suffrage truly universal, extending the vote to that important part of the population that still lacks it. “Avvenire” has already dealt with the topic on various occasions. The proposal is to introduce children’s fiduciary vote, exercised through parents until the children reach the age at which they can directly express their vote (18 years or less). This mechanism would strengthen the role of families and future generations in the political decision-making system and the consequent allocation of public resources, which we know is predominantly concentrated on the interests of older generations (pensions and healthcare). To ensure a sustainable future, it is crucial to make the political system more sensitive and responsive to the interests of younger generations. The Demeny vote – in truth Antonio Rosmini had already spoken about it in the mid-19th century – is currently only being discussed at an academic level in countries with worrying demographics such as Italy, Japan and Germany. It would be useful to test its effectiveness in some minor decision-making context (local administrations, parishes or other collective decision-making bodies relevant to the life of families), in order to be able to measure its effectiveness in reorienting public policies.
A further radical proposal, aimed at promoting gender equality and strengthening the economic security and status of women within families, concerns the incorporation of the family. Incorporating the family for Demeny means considering the family as an interconnected economic unit, similar to a company, in which revenues (salaries, annuities, pensions) are considered a resource owned by the family itself and not by the individual spouses. In Italy the property regime of community of property is already foreseen, but it is optional and concerns only the assets purchased by the spouses together or individually during the marriage. Demeny’s proposal extends the communion regime also to incomes, with the idea that this profound sharing of resources strengthens in particular the position of women, who typically still suffer from a wage gap, and allows potential mothers to cope with more serenity the risks associated with specific investments in motherhood.
Finally, the last of Demeny’s “disruptive” ideas concerns the strengthening of parental responsibility and authority through the introduction of educational vouchers. In fact, Demeny believed that the “nanny” state, which has the ambition of completely replacing parental functions – including educational ones – has ended up making the need and ambition of building a family redundant. To counter this trend, it may therefore be desirable to strengthen parents’ responsibility and authority over their children’s education through the implementation of vouchers, which promote competition between educational institutions and return control over their children’s education to the parents themselves, as well as promoting an overall improvement in the quality of education and the educational environment.
Of course, each of these four proposals is challenging in its own way and requires a broad political debate, also because the legal ramifications are profound, even touching the Constitution itself. Difficult times, however, require radical proposals and the challenges that the demographic winter poses to the country cannot be addressed with the usual and well-tested policies, based on economic incentives aimed at compensating the mere cost of having children. The merit of Demeny’s proposals, launched almost forty years ago, is that they indicate the uphill road ahead.