More than money needed to help families grow

When people think about Panzhihua in Sichuan province, the first thing that springs to mind is mining, iron and steel. Yet the city made headlines for a very different reason recently: it became one of the very first places in China to offer "baby bonuses" to couples that have a second or a third child.

The local government has offered parents of a newly born second (and third) child a monthly allowance of 500 yuan ($77) per child up to the age of three. The only condition is that the parents should have local house registration (hukou). Over three years, the amount would add up to 18,000 yuan per child. Families would also be able to access free maternity care in local hospitals, and State-owned enterprises have been urged to improve and expand their childcare services.

The central government and other local governments will be eagerly watching Panzhihua to see if the policy has had any positive effect. Perhaps the number of births will increase, prompting the authorities to replicate the baby bonus policy elsewhere. But caution needs to be taken.

When trying to evaluate policies designed to encourage childbirths, demographers consider two factors－what we call "quantum" and "tempo". Quantum means the total number of children born while tempo means when they are born. Policies, such as those introduced in Panzhihua, aim to change the quantum. In other words, they try to convince people with one or two children to have another, thus increasing the total number of babies born.

However, when we look at other places around the world where such baby bonuses have been introduced (such as in Russia), we find that the majority of couples who had children after the policy was announced were planning to have them anyway. All the policy did was change the tempo. In this sense, the policies do not really affect the total number of children born.

So why don't baby bonus policies around the world make a difference to quantum? Partly because of the relatively small contribution of such bonuses to the real cost of running a family, more precisely, raising a child. The high costs of housing, especially in the context of a challenging job market, are a key issue in "starting out in life".

The direct costs associated with childbearing and childrearing are also critical. One factor which is regularly cited is the financial, and psychological, burden of providing the "best" education for children, which often means enrolling the child in after-school tutoring classes and other extra-curricular activities.

In 2018, the Chinese Society of Education estimated that Chinese parents spend an average of 120,000 yuan a year on after-school tutoring for their children. Compare the figure to the amount offered as a baby bonus by the Panzhihua local government. To take it to an extreme, one-on-one one-hour-a-day tutoring classes in Beijing could cost 3,000 yuan a month. In other words, six months of the baby bonus would "buy" private tutoring for just one subject for just one month.

That's why the recent clamping down on private tutoring announced by the central government may be a more significant factor in shaping family formation in the future than any baby bonus.

But money is not the only factor in influencing couples' decision to have children. It is widely known that there are multiple barriers to starting a family, let alone adding another member to the family in China, or elsewhere. As a result of the huge changes in society in recent years, younger people in China have very different expectations from their parents in terms of how they want to live their lives and, importantly, to capitalize on the very high level of education they have received.

However, as women are still expected to shoulder the majority of the domestic, childcare as well as eldercare responsibilities (elderly parents and in-laws), they are disproportionately penalized both in the workplace and at home. Employers remain largely indifferent to the challenges of being working parents and, in the worst cases, persist with their discriminatory practices. This means the potential damage to desired lifestyles and career trajectories－what economists refer to as the "opportunity cost" of childbearing－has never been higher.

Countries around the world which have recognized individual aspirations, and sought to help families overcome the associated challenges, have been rewarded with not only more favorable demographic characteristics, but also happier, more contented citizens and families.

So many younger Chinese women (and men) are finding the whole "marriage and family package" less appealing, and reasonably limiting the "damage" by having fewer and fewer children. Despite this, surveys continuously tell us that they have not given up on the idea of getting married and having children.

Under these conditions, policies which simply aim to "increase fertility rates" without recognizing and addressing the underlying reasons for couples' hesitation may be destined to fail, or, at most, be an expensive means of simply changing the tempo of childbearing.

The views don't necessarily reflect those of China Daily.

The author is a professor of social science and public policy at The Hong Kong University of Science and Technology.

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