Why do the French have more children Marina

Why do the French have more children? Marina Hinterhaeuser

Europe’s population growth rates are falling… • Italy 0. 04% • Austria 0. 09% • Germany -0. 02% • France: 0. 35% !!! Figures taken from https: //www. odci. gov/cia/publications/factbook/ (CIA Fact book)

Italy, Austria: Germany:

France:

Outline: • • • Possible reason behind the difference Benefits and costs of children Budget constraints French government’s efforts Effect on growth rate Summary and Conclusion

Cultural Differences? Germans… Angela Merkel and Oliver Kahn Too boring? Too scary?

Cultural Differences? French… Moulin Rouge girls and Laetitia Casta Sexier? ?

That can’t be true? ! Heidi Klum, Seal, and Angela Merkel

Immigration? According to INSEE: During Jan ’ 01 – ’ 04: 64% natural increase 36% immigration Germany relies on immigrants for growth.

What’s the French secret?

Benefits and Costs of Children • Costs: - education - medical care - food/apartment - clothes - presents - holidays …

Benefits and Costs of Children • Benefits: – Pleasantness – Care for you in the future – (reproduce your genes)

Benefits and Costs of Children Note: costs and benefits are different for each household

Benefits and Costs of Children Quick summary: • Law of diminishing marginal returns • Here: According to Cost-Benefit Principle, parents would decide to have 2 children • 2 children not enough to replace 2 parents for population growth

Budget Constraint

Government subsidises children: • • Liberal maternity leaves Part-time work for women Some child-care cost covered Offers child-care centres for working mothers • Discounts on transportation, cultural events

On top of that: If a family has three or more children: tax breaks MORE money can be received from government as maternity leave compensation

Benefits and Costs of Children • Marginal cost decreases with the 3 rd child Family will have three children

Budget Constraint

Why the French do it better… • Other countries also have subsidies, such as free education, maternity leaves, child-care, etc. • BUT these things to not provide an incentive. They are taken for granted.

Why the French do it better… • By reducing income tax from 3 rd child onwards, families are given an incentive to have more children – Marginal Cost decreases – Total Utility decreases

Important Note: • Incentive is even stronger if income taxes are very high: – France: up to 40% taxable – Germany: up to 42% taxable – Hong Kong: <16% Figures from: http: //www. worldwide-tax. com

Summary: • French are not just sexier. • French government gives incentives to parents to have three children • Reduces the marginal cost of the third child • Increases family’s budget for children

• Many different countries have different types of population growth issues. • China limits the number of children • Other countries need more children

• If you have any ideas as to what policies different countries should employ, involving cultural issues, please come to me and we can have an interesting discussion

Let’s hope that no culture goes extinct Thank you. Marina Hinterhaeuser