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Leonid Bershidsky

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?

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.