Why do the Why do the French have French have

more children?more children?

Marina Hinterhaeuser

Europe’s population growth rates are falling…

• Italy 0.04%

• Austria 0.09%

• Germany -0.02%

• France: France: 0.35% !!!0.35% !!!

Figures taken from https://www.odci.gov/cia/publications/factbook/(CIA Fact book)

Italy, Austria: Germany:

France:

…WHY??

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… Too boring? Too scary?

Angela Merkel and Oliver Kahn

Cultural Differences?

French… Sexier??

Moulin Rouge girls and Laetitia Casta

That can’t be true?!

Heidi Klum, Seal, and Angela Merkel

Immigration?

According to INSEE:

During Jan ’01 – ’04:64% natural increase36% immigration

Germany relies on

immigrants for growth.

What’s the French secret?

Benefits and Costs of Children

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MarginalCost

•Costs:

- education - medical care - food/apartment - clothes - presents - holidays …

Benefits and Costs of Children

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MarginalBenefit

• Benefits:

– Pleasantness

– Care for you in the future

– (reproduce your genes)

Benefits and Costs of Children

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1 child 2 children 3 children 4 children

Marginal Cost

Marginal Benefit

Note: costs and benefits are different for each household

Benefits and Costs of ChildrenQuick 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: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 3rd child

Family will have three children

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1 child 2 children 3 children 4 childrenMarginal Cost

Marginal Benefit

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 3rd 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 Let’s hope that no culture goes extinctgoes extinct

Thank you.Marina Hinterhaeuser