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By Reuters Staff. BUDAPEST Reuters - A new Hungarian government scheme to promote marriage and childbirth with subsidized loans has already helped produce a boom in weddings, though it is still too early to say whether more babies will follow.
Editor's Note : The following article, originally published on July 10,is our sixth most popular blog post of the year. Inthe government of Hungary announced a major new policy : families would be given generous subsidies to buy or build new homes, and the subsidies would scale up based on their marital status and the of children they had. Imagine the U. Do you think some people would be more likely to have that extr? My guess is that they definitely would. However, none of the policies I reviewed for the U. To get that, we need the total fertility rate, which estimates how many children a woman entering her childbearing years in a given year can expect to have if birth rates are stable during her lifetime.
And here we see that TFR is rising quickly. However, whatever force drove this baby boom now appears to be fading: fertility was flat inand early data for suggest that fertility may now be falling, which again suggests that CSOK has had limited effects boosting fertility in very recent years.
But we can zoom in to see how these trends shake out for the families actually targeted by the policy, that is, married families who may be interested in having higher-parity children. Hungarian birth rates by age among married women are available back to But have births mostly increased for higher-parity births? It turns out the answer is no. In fact, the of third-or-higher parity births has fallen in the last few years, alongside rising first and second births, despite the incentive offered for third births being vastly higher than the incentive offered for first births!
Added to the fact that fertility rates have actually plateaued since CSOK got into full swing inand the case for CSOK boosting birth rates looks pretty weak.
A quick look back at the marital birth rates by age makes it quite clear that marital birth rates started their steep rise years before CSOK was implemented. But that makes this next question even more interesting: if this huge cash subsidy is not causing a baby boom, what is? A similarly-generous deduction in the U. research by academics suggests that this increased tax exemption for kids probably did boost birth rates.
They estimate that the policy change caused between 6, and 18, more births from to This is strange, however, because these tax benefits are substantially smaller in their total value than CSOK. It is possible, however, that families are more responsive to tax changes than to a new program like CSOK, and couples may expect its benefits to be repealed at some point in the future, whereas tax code changes are more permanent. Clearly, if the academic estimates provided are at all correct, then this tax extension has had an appreciable effect on fertility and can for a large share of the fertility increase in recent years.
However, even under the largest effect estimate, tax reform cannot for all of the increase. But maybe other policies changed, too.
My preferred way to measure this is total family and child spending, divided by the total of children in the country, represented as a share of average national income. This metric captures changes in the of children, the surrounding economy, inflation, and policy changes. What we can see is that family spending rose sharply from tothen actually fell until by this metric, largely because the economy grew. It has spiked again more recently, thanks entirely to CSOK. If the tax change can explain much of the fertility increase from toas it can, CSOK can probably explain some ongoing increase in and Starting aroundbut really taking off in andwomen in Hungary started becoming more likely to get married.
The marriage rates shown below reflect what share of unmarried women in a given age group the year prior got married in the last year. In most countries, this is flat or falling, especially for younger women, as the average age of first marriage is pushed later and later. But in Hungary, the rise in the age of first marriage, which has been so inexorable in other countries, has actually stalled out and perhaps started to fall.
The country is not just experiencing a fertility spike; Hungary is winding back the clock on much of the fertility and family-structure transition that demographers have long considered inevitable. This is true even on some unfortunate metrics: unmarried teen pregnancies have risen in Hungary in recent years, even as they have fallen in other countries.
Marriage rates of teen women are rising as well, which may be good, or may reflect women being relegated to homemaker roles and kept out of the public sphere, perhaps against their desires. Hungary was hard-hit by the Great Recession, and its GDP per capita took longer to recover to pre-recession levels than many other countries, so it probably is not due to an economic boom. However, inHungary adopted a new, and extremely controversial, constitution.
Moreover, Article L of the constitution, which, again, is the basis of Hungarian government todaysays. Hungary shall encourage the commitment to have children.
The protection of families shall be regulated by a cardinal Act. These changes were largely a surprise to many Hungarians, who are not, according to public surveysan extremely religious or family-oriented people; in fact, Hungary has the third highest religiously unaffiliated population share in central and eastern Europe.
But while it may have been a surprise, once implemented, constitutions can be hard to undo.
Given the long-term nature of child-rearing, this guarantee may be very important and serve as a positive shock to the long-run family expectations of Hungarian women. Indeed, if anything, desired childbearing in Hungary is falling! The last data point I could find is inbut at least at that time, desired fertility was continuing its steady slope downwards.
And marriage makes childbearing much more likely among the vast majority of women who desire to have .
By providing a grant for married couples with children, CSOK incentivizes childbearing, sure, but it also gives couples the financing they need to get a new home and live together, provided they are willing to get hitched. Beyond the direct natality incentive, these policies may induce more marriages, and with more marriages, you get more births of all kinds, including first and second kids, despite the much smaller CSOK subsidies than what is offered for a third. The government is spending huge amounts of money and will probably never reach replacement-rate with this strategy.
However, Hungary is experiencing some fertility gains, probably at least partly as a result of a basket of policy changes including tax preferences, cash grants, loan subsidies, constitutional protections, and costly political aling. But to the extent these policies are working, they are effective because they are not being used in isolation, but rather together as a whole concert of pro-natal policies and cultural nudges.
And they are working because they induce marriagenot simply childbearing, and marriage helps boost long-run fertility, not just birth-timing. He blogs about migration, population dynamics, and regional economics at In a State of Migration. Interested in learning more about the work of the Institute for Family Studies? Please feel free to by using your preferred method detailed below. For media inquiries, contact Michael Toscano michael ifstudies.
Hungarian women offered tax breaks, loans to marry and have more kids
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IFS on Patreon. The Institute for Family Studies is a c 3 organization. Your donation will be tax-deductible. Highlights Print Post. But with all that money being spent, we may wonder: is it having any impact?
Culture May Matter There may be something else at work here: a marriage boom. Related Posts. Public PolicyParents. WomenWork-Family. FertilityReligion. PovertyPublic Policy. The Ideal Husband? MarriageWomenMen. Public PolicyPolitics. First Name.
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