Pro-Natal Policies Analysis

Pro-Natal Policies in Norway

Background

Norway’s average fertility rate over the past 10 years is about 1.9, compared to Singapore’s average of 1.25 over the same period (The World Bank, 2014). Furthermore, 5 out of 6 women between the ages of 30-39 still remain employed (BBC News, 2006).

Norway is Scadinavia’s richest country, enjoying an oil boom which started 40 years ago (Mohsin, 2014). Most of its revenues are channelled into a wealth fund that has accumulated to $890 billion, or about $170,000 per person. These oil revenues allow for large budget surpluses, protect government schemes from recessions, and provide resources for the future (Rindfuss et al.).

The Nordic welfare states have a long-running tradition of implementing policies directed at the family (Rønsen, 2004). However, these policies are not for pro-natalist reasons, but rather based on their ideas of gender equality and a general concern for the well-being of families and their children. Also, Norwegian society holds the philosophy that children are an essential part of society (Andersen, 2012).

Policies

Child Benefit

The child benefit is paid to all families with children below the age of 18 to cover their costs of having children (Ministry of Children, Equality and Social Inclusion). It is paid per child from the month after the child’s birth till the month before the child turns 18. In 2012, the child benefit was € 119 per month. A single provider is entitled to an additional child benefit.

Parental Leave Benefit

Families receive the parental leave benefit upon the birth of a child, a scheme that was started way back in 1956 (BBC, 2014; Ministry of Children, Equality and Social Inclusion, 2014). For most families, this continues until the child is about a year old. The goal of the parental leave benefit is to make it financially feasible for one parent to care for the child at home during its first year, as well as to facilitate equality in parenting. A period of 47 weeks with parental leave benefits, or 57 weeks with reduced benefits (80% of pay) is shared between the parents to provide income for the first year of the child (Anderson, 2012; Ministry of Children, Equality and Social Inclusion, 2014). After the first year, the child is entitled to a place in a day-care centre and/or a cash benefit.

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Mothers have the right to parental leave benefits if they have worked for at least 6 out of the last 10 months (Ministry of Children, Equality and Social Inclusion). Mothers who do not fulfill this requirement have entitlement to a lump sum maternity grant. In 2011, this grant was € 4310 per child. The three weeks before and six weeks after birth have to be taken by the mother as part of the parental leave benefit period. The father also has to fulfil a minimum quota of leave (Ministry of Children, Equality and Social Inclusion, 2014; BBC News, 2014), with the Norwegian government has planning to lengthen this by one more week. The rest of the leave period can be freely shared between both parents. When the father takes any leave outside of his quota, he has to take up primary care of the child. A goal of this is to allow for fathers to spend more time alone with the child during the toddler stage.

Since the paid leave is financed by taxes, employers do not lose out when employees use their parental leave (BBC News, 2014). Funding for the parental leave benefits and lump sum maternity grants amount to about € 1.83 billion (2011) (Ministry of Children, Equality and Social Inclusion). More than 80% of mothers and 70% of fathers are entitled to parental leave benefits.

Cash Benefit

For one and two year olds, parents can choose between a place in a day-care centre or receive a cash benefit (Ministry of Children, Equality and Social Inclusion). They can also choose to combine a reduced rate cash benefit with reduced time in a day-care centre. Only children who are one year of age can receive the cash benefit and are entitled to a maximum benefit period of 11 months. For cash benefits, only full or half cash-benefits can be chosen. The cash benefit is approximately € 404 per month (2011), is non-taxable, and is paid without income or means-testing.

Day-care

A child is entitled to a place at a day-care centre as soon as the child turns one-year old (Andersen, 2012). Both public and private day-care centres are heavily subsidised by the state, and parents are means-tested and are charged accordingly at different rates. Fees are capped at €308 per month. This is in contrast to an average of €144 a week in Ireland. Furthermore, the childcare system in Norway is highly regulated and the standard of care is known to be of very high quality.

Effectiveness

A study by Lappegård (2010) found that policies which promote involvement of fathers in childcare and gender equality such as paternal leave are positively associated with second births, while policies which grant general support for the family such as childcare cash benefits are positively related with third births.

Another study conducted by Zuvander, Lappegård and Andersson (2010) found a positive association between fathers’ parental leave use and continued childbearing in Norway for one-child and two-child couples. For families with two children, an extended period of leave for the mother was positively associated with the birth of a third-child.

Furthermore, using data from Norway, Rindfuss et al. (2007) showed that the greater availability of child-care centers leads to a younger age for the first birth, and that high quality and affordable child-care leads to increased child-bearing.

However, Rønsen, a Norwegian statistician, claimed that implementing generous family policies do not guarantee high fertility (BBC News, 2014). Sweden is cited as an example, whereby birth rates have not improved even though family policies were as generous as in Norway. Sweden went through a sharp increase in unemployment, after which the fertility rate fell from 2.1 in 1992 to 1.5 in 1997. It is believed that it is Norway’s combination of steady economic growth and family policies that has kept birth rates high, since people have a tendency to postpone having children during periods of economic insecurity.

Pro-Natal Policies in France

Background

France has the second highest fertility rate in Europe, ranked after Ireland (France Diplomatie, 2013). In 2012, the fertility rate was 2.01, close to the replacement rate of 2.1. The birth rate has been increasing since 1995, and this trend has often been linked with many family policies during that period (Laroque and Salanié, 2008). In addition, France still maintains a high rate of female employment: 85% of women are employed (France Diplomatie, 2013).

In France, fulfilment comes about from a rewarding family and social life (France Diplomatie, 2013). A 2011 study found that close to 60% of young French people were keen to start a family and have children. This figure was the highest rate in Europe.

Policies

Generous Monetary Benefits

Women under maternity leave can receive full salary for 16 weeks, and are eligible to 26 weeks if the child is their third, and up to 34 weeks in the case of multiple births (European Union, 2014). Fathers are granted 11 consecutive days of paternity leave with full salary. Furthermore, families are entitled to monthly parental allowance if one of the two parents stops working or reduces his/her working hours to care for a child under three years of age.

In addition, parents receive a family allowance after their second dependent child under 20 years of age (European Union, 2014). This monthly amount depends on the number of dependent children. After the third child, if the other two children are under 21 years, families are entitled to further family support amounting to € 167.34. This is subject to means-testing

Families can also receive assistance for their first child (European Union, 2014). For example, they can be paid a premium of €923.08 for a birth or €1846.15 for an adoption; a monthly allowance to assist parents with raising and education costs for three years (€ 184.62); family support allowance to help raise a child in the absence of help from one or both parents (ranging from € 90.40 to € 120.54), and a back-to-school allowance that is means-tested to help families with their children’s schooling costs (€ 360.47 for 6 to 10 year olds, € 380.36 for 11 to 14 year olds, € 393.54 for 15 to 18 year olds)

Tax concessions for big families

Large benefits stand to enjoy substantial tax concessions, whereby families with at least three children benefit the most (European Union, 2014). The French tax system is such that tax units are households, not individuals. Each household amounts to a number of shares determined by marital status and the number of children. Married couples are entitled to two shares, a further half-share for the first two children, and an additional one share per child after the third child. Given that taxable income is calculated as the total household income divided by the number of shares in a household, large families get to enjoy a significant reduction in taxes.

Wide range of childcare services

France has a comprehensive childcare and pre-school system that allows parents to continue working (European Union, 2014). Nurseries are run by businesses, the local government, or parent associations. The fees for most nurseries are means-tested. Parents can also choose to hire a licensed childminder who can look after up to 4 children at his/her home. Also, pre-school in France is free. In addition, parents with children under the age of six can make use of after-school centres, which are usually subsidised by the Familiy Allowance Fund.

Effectiveness

Laroque and Salanié (2008) found a notable impact of financial incentives on fertility especially for the first and third child. Also, according to Letablier (2008), the main cause for France’s impressive fertility rate is likely due to the of support provided to parents to reduce the costs of children and in reconciling work and family life for mothers so that they can work and care for their children. The latter supports findings from a recent OECD report which found that the most effective policies to boost birth rates are the ones that help women to reconcile career and family. According to the report, government expenditure to provide childcare to help families improve work-life balance is more effective in raising fertility rates than giving money to families to subsidise births (Silverman, 2011).

What Can We Learn? How Do They Suit Their Respective Economies (welfare/open economy?)

France

Financial incentives, though helpful in increasing fertility to a certain extent, are not as effective as helping women to reconcile work and family through the availability of childcare services and parental leave programs. Concessions on taxation, nonetheless, may be a useful tool in raising birth rates.

To boost fertility, government policy should utilise a wide variety of instruments and measures to create a conducive environment for child-bearing. McDonald (2007) lends support to this by advocating for comprehensive policies over piecemeal policies, as the real importance of a single policy lies not in its econometric impact, but in how it adds to the way young people perceive their society’s support for those who have children. It is the symbolic meanings of the policies that count most.

Norway

Funding effective pro-natal policies may require substantial government spending, which may only be affordable to well-endowed and wealthy countries without the possibility of a deficit. Economic stability may also be a pre-condition for high and steady birth rates.

Policies that advocate gender equality in parenting may be effective in raising birth rate. Granting more paternal leave to fathers can be helpful, as well as setting a minimum quota of leave to encourage fathers to spend more time caring for the child. Also, the availability of good quality and affordable child-care services can help boost fertility.