Making Babies to Grow Economies Won't Work
Hungary, Poland and others are offering subsidies to raise birth rates, but their efforts have been futile.
Economic multiplier?
Photographer: Will Russell/Getty Images
In his recent state of the nation address, Russian President Vladimir Putin spent about 20 minutes on a sweeping constitutional reform proposal designed to keep him in power indefinitely — and about twice as much time on ideas meant to boost the birth rate. This is typical of Europe’s national-conservative governments, and even some relatively liberal ones, that are preoccupied with fertility policies because of declining populations.
Perhaps they’re on to something. In a just-published working paper, economist Charles Jones of Stanford University built some models to show that so-called natalist policies may be “much more important than we have appreciated” in determining whether nations, and the world as a whole, will end up with a shrinking population and no economic growth — or with both the population and the economy on a path of steady growth. The intuition behind the models is that growth is, essentially, a function of people’s ability to come up with new ideas, and if the number of people stops growing or falls, the stock of knowledge stops expanding.