Can child transfers indeed pay for themselves in the form of increased fiscal revenues?

What is it about?

Often, subsidies are aimed to raise fertility, with the rationale that in the long run they "pay for themselves". Most studies ask if fertility can effectively be raised. We check if they can really ever pay for themselves. Whatever the actual effects on fertility, mildly successful programs have the potential to "pay for themselves" in fiscal terms if they are of modest size (less than 1% of GDP). In terms of ultimate objective -- welfare of the societies -- the only way in which subsidizing fertility can be beneficial is we we all really love those "extra" children.

Featured Image

Photo by Colin Maynard on Unsplash

Photo by Colin Maynard on Unsplash

Why is it important?

There can be many reasons for which the societies may want to subsidize families with children. And, as such, such instruments may carry many benefits to children and parents alike. However, fiscal gain cannot be taken for granted. For the clarity of public debate, it is important to recognize what we choose as societies. Our study is also a bridge between demographic simulations (which typically cannot deliver macroeconomic implications as such) and macroeconomic simulations (which until recently typically ignored the complexities of fertility and demographic processes).

Perspectives