Singapore is not serious ...

... about raising fertility.

Over at Demography Matters, my friend and occasional co-blogger Randy McDonald brings our attention to the Singaporean government’s preoccupation with below-replacement fertility. They seem quite worried about it, to the point of calling for ever-greater immigration designed to keep up the population at 5.3 million.

The thing is, “seem” is the operative word. Judging from actions, the Singaporean government does not care that its native-born population is going to fall. And it is probably right not to care! But I find it mildly vexing that it makes so much noise while doing so little.

You can find the current natalist policies on page 72 of this population white paper. The highlights:

• 75% of the cost of fertility treatments;
• $4,800 (U.S., at an exchange rate of 80¢ per Singaporean dollar) for the first and second child, rising to $6,400 for the third and beyond;
• A deucedly vague “affordable” rental scheme for people with enough money to buy an condominium but are waiting to move in;
• $480 a month for day care;
• A tax rebate of $4,000 for the first child (doubling to $8,000 for the second and $16,000 for later ones ... but not refundable);
• A cumulative tax deduction for working mothers of 15% of earned income for the first child, 20% for the second, and 25% for the third.

So what does this all come to? Well, the median income in Singapore is $28,800 per year. For a couple with two children, you get a one-time gift of $9,600. Then you get $5,760 for day care ... which drops in half when the child is no longer an infant. (And does not get you much unless day care is much cheaper than in the United States. Unlicensed housefront operations in Queens Licensed home operations in Upper Manhattan cost more than about $480 a month.) Our hypothetical two-income couple has an income tax liability of $2,232 (calculated using this chart from the Singaporean tax authorities) which unless I am greatly misunderstanding means that the value of the subsidy is effectively capped.

Total annual payments for a first child in a two-income family, with both earning the median: a one-time first-year gift of $12,792, followed by $5,112 per year until the child enters school. Life-changing, this is not. And worse yet, if you needed fertility treatments, which most older couples do, you needed to think about the cost. (Israel does it differently.)

This is not serious.

What would be serious? Ah. Well. In 2011, the Singaporean government ran a surplus of $21.3 billion. There were 42,600 births in the country. A fertility rate high enough to replace the population (in fact, a bare tad higher) would imply roughly 70,000 births. $21.3 billion ÷ 70,000 ≈ $300,000 per child.

OK, then: offer $300,000 per child. Tweak as desired. That would be serious policy. Of course, I am not saying that paying a $300,000 child bonus would be good policy.

But it would be affordable. And it would live up to Singapore’s reputation for social engineering! So before they give up and say it cannot be done, they really should at least try. Or stop complaining.

Comments

[Randy McDonald]

Beautiful pictures.

[Doug M.]

Child care is quite cheap in Singapore, thanks to the enormous population of Filipino "amahs" or nannies. So that part may be better than it looks.

That said, it's pretty well known what works. Halfassed subsidies? Not so much. Cheap, high-quality day care? Ahhh, now you're talking. Cheap housing helps too, though that's probably beyond the scope of fertility policy.

Doug M.

[Noel Maurer]

I would like to see a government offer serious baby bonuses. (Like, say, $300,000 per child.) Such a number is affordable (it would come to about 10% of GDP in the United States), before counting the positive long-term effect it would have on social insurance programs.

It would certainly tell us whether governments can increase fertility above replacement in a lasting non-dictatorial way. Right now, all the experiments we have are too small to matter or (as you point out) involve things outside the standard scope of natalist policy.

I suspect that $300,000 would boost birthrates, a lot ... but I don't know, and that vexes me.

[Doug M.]

it's politically impossible in a US context. welfare queens popping out babies to become a millionaire!

and to be fair, you'd have a fair number of parents who'd blow the money PDQ. mind, if your only purpose is to raise the birth rate, that's no biggie.

mind, $300k in a trust fund, parents get the income until the kid turns 18, at which point the kid can start withdrawing 10% of the principal every year? that could be chocolate and peanut butter alike. still impossible, sure.

Doug M.

[Will Baird]

What if we provided services or food or whatnot instead of cash? or most of it being !cash?

Vouchers for daycare, frex.

[Noel Maurer]

Free daycare is a good thing. It is also not cheap if done right in the developed world; you're talking about $2,000 per month for the really good ones. It's labor intensive, and you can't really scrimp on the capital. Undiscounted, six years of it comes pretty close to $300,000.

I'm obviously in agreement with Doug that the idea is impossible. I just want to see it done to know whether it would work.

Hmm - a controlled experiment in a low-fertility low-income country? Hello, Algeria! (Or some states of India?) Still be damned expensive to run right, of course. But let's say an 11x median annual wage baby bonus. (The median wage in the U.S. in 2011 was $26,965: http://www.ssa.gov/oact/cola/central.html.) How much would that boost birthrates and would the effect be sustained? This inquiring mind wants to know!

[Doug M.]

Actually, daycare here in Germany is about $250/month. It's heavily subsidized, of course.

But $2,000 a month sounds a bit high. Say your staff cost you $60k per year. (Not salaries, but compensation cost to you with benefits and whatnot. Their salaries would be around $40k) Say that nonlabor costs double that to $120k. Caring for small kids is pretty labor-intensive, so I suspect that's high, but let's go with it. If you have an average adult / kid ratio of around 8/1 (average; it'll be lower for babies, higher for older kids) then each kid needs to pay 120/8 = $15k/year = $1,250/month. That's a lot higher than the $250/month we pay here in Germany, but like I said, heavily subsidized.

Incidentally, US state-level daycare regulators tend to impose much lower kid-adult ratios than Germany does. Why? Don't know, but I suspect because it's the easiest thing for a regulator to check. You don't have to send an inspector out to take swabs from the daycare's kitchen -- you just have to check their records on file.

The German model is different, and allows much higher ratios. For one thing, babies aren't allowed -- you can enroll the kid after the first birthday if s/he can walk a certain distance unaided. (We'll put aside whether that's good policy. Just telling you how it is.) The overall ratio is probably around 12-1. On the other hand, the workers are professionals; kindergarten teacher is a serious career, not considered much inferior to schoolteacher, and you need a degree plus a couple of years' vocational training. I don't know how much they make, but they're clearly living middle class lifestyles -- decent cars, the occasional vacation to the Baltic or the Mediterranean, and so forth. Also, inspections happen a lot, and the inspectors are also well-paid professionals, and the oversight regulator is honest, competent, and reasonably well funded. So, the model seems to be "pay the caregivers well, train them well, inspect the facilities regularly, and you can allow much higher ratios".

Doug M.

[Noel Maurer]

$2,000 isn't a calculated price; it's a real price, from the Boston market. I've been immersed in it lately. Can't imagine why. :-)

(Eight-to-one is a high ratio.)

The cheapest that we felt comfortable with was $1200. I know it from very good authority (e.g., parents) that you can find good day-care for much less in New York, but there are likely neighborhood effects.

And changing tracks, I'll just say it: refusing to enroll infants is just stupid. But a lot of German family policy seems stupid. We've got a German couple with a 7-month old two doors down and another with a 2-year-old and a five-month old on the second floor. They seem ... uh ... unenthused about what was on offer back home.

[Doug M.]

I believe it's a real price. That doesn't mean it's necessarily reflecting actual costs.

Refusing to enroll infants is stupid, yep. My understanding is that some German daycares -- mostly in urban areas -- do take babies. But around here, the kid must be past its first birthday and able to walk.

I wouldn't say we're unenthused. Quite the opposite! We love the daycare here. Putting aside the subsidized price, the quality is consistently good-to-excellent. The facility is oldish -- it dates back to around 1970 -- but is clean, safe, and well maintained. The staff are fantastic. The kids spend eight hours a day in a fun, stimulating environment with a good mix of organized activities and free time. They can bring bag lunches or, for about $3/day, they can have a tasty, nutritious hot lunch. Snacks (apple and carrot slices, tangerines) are served throughout the day. There's a big playground for running around and screaming, including an enormous sandbox. All four of ours have gone through the system (Alan only briefly) and all four have had a wonderful time -- learned a lot, made friends, everything you could ask for.

Anyway. A number of observers have suggested that the German model -- including the no-babies rule -- is designed neither to foster population growth, nor to benefit working mothers either. Rather, it's a socially subsidized good based on a traditional model of a stay-at-home mother who may well do part-time or short-term work, but probably doesn't have a full-time job and a career. Great as it is, in terms of social policy it falls neatly between two stools.

Here's a thing, though: taking care of babies is significantly more expensive than taking care of, say, four yos. (Because you need a higher ratio of caregivers, right? One trained adult can handle a dozen 4 yos. A dozen six month old babies, yeah, no.) So, accept babies, and you have to either raise subsidies or raise prices. The former might be possible if (1) times were prosperous and the budget was flush, and (2) there was a Socialist government in charge. Neither of those conditions currently apply, nor are likely to for some time. As to the other option, I think there's room to raise prices -- let's be honest, $250/month is crazy cheap -- but it wouldn't be easy, and it would hit the working poor hard.

So, not simple. I think the German gov't has it wrong, but I can understand why it's not in a hurry to change things.

Doug M.

[Will Baird]

Your normal, real price out here in the bay area varies wildly for daycare of quality. There are the bigger businesses that do it and there are the various smaller ones. The smaller ones are often NOT good despite the excellent recommendations.

We had a very bad experience for Orest. I still seethe over it.

Here good daycares run about $800 to $1200 per month per kid with discounts for multiple kids. In the end, the best result for us was to bring over Lyuda's mom. Biggest issue is that my son doesn't get socialized as much. We take care of that though through classes (judo and gymnastics) and goofing off with other friends' kids.

[Peter]

What I figure is that (a) governments can do little or nothing to raise birth rates, but (b) eventually they'll rise on their own.

[Gareth Wilson]

I'd be fine with a $300,000 baby bonus - as long as each baby would pay more than $300,000, plus inflation, in taxes over its lifetime. Minus all benefits, of course. We could get the government to investigate each baby and predict which will become taxpayers.

[Colin Alberts]

Hey! This is a reason you should have stayed on Facebook, Noel--I didn't know a little one had arrived until I poked back on your blog today. Congratulations!

[family activity]

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