Sanae Takaichi’s October 4 appointment as the first female leader of Japan’s ruling Liberal Democratic Party justifiably grabbed headlines. Almost as if to play up her gender in Japan’s still male-dominated politics, Takaichi has called for more female-friendly policies.
From promoting more female legislators to promising a society where women need not put their careers on hold, she has outlined a platform that mixes protection of the “traditional family”, including through opposition to allowing married women to keep their maiden names, with support for working mothers.
The result is a necessarily larger fiscal deficit for child care. Takaichi has called for tax deductions and subsidies for domestic workers and babysitters, who remain too costly for most Japanese households.
This added financial burden comes on top of other costly measures, such as reimbursements of up to 500,000 yen (US$3,400) per child for childbirth expenses, in place since early 2023. Additional expenditure to fund more children is one reason analysts expect Japanese bond yields to surge and the yen to depreciate under Takaichi’s tenure.
While Takaichi’s “pro-women” messaging sets her apart, she is not alone in advocating taxpayer-funded incentives for families. In July, the Chinese government announced its first nationwide cash subsidy to encourage childbirth, offering 3,600 yuan (approximately $500) per year for each child under the age of three.
A country that had only abolished the one-child policy in 2016 has now joined the global trend of offering financial incentives for citizens to procreate.
Money can’t buy procreation
It is an increasingly crowded field, especially in East Asia. In January, the Taiwanese government implemented a new policy giving out 100,000 New Taiwan dollars ($3,300) for each newborn.
That followed Hong Kong’s 2023 policy granting 20,000 Hong Kong dollars ($2,560) to each child born to parents with permanent residency in the city. South Korea has subsidized childbirth and child-rearing for years, with Korean parents receiving monthly payments of up to 1 million won ($750) as early as 2023.
There’s just one problem with all these policies: none of them work. Years after implementation, these jurisdictions still rank among the lowest in fertility and birth rates, with no indication whatsoever that showering ever-increasing amounts of cash on prospective parents has made them any keener to have more children.
Facing the urgent challenges of depopulation and aging, both of which sap economic dynamism, East Asian societies need to start devising practical alternatives rather than clinging to the mistaken belief that financial incentives alone can reverse aversion to parenthood.
To be sure, the fixation is understandable. Academic study after academic study has shown that East Asia’s fertility crisis stems from a complex mish-mash of social, economic, and cultural factors – from the decline of pro-natal Confucian and Buddhist ideologies to the sheer cost of high-quality education.
Many of these trends are simply beyond the control of government policy. Attempts to control others, as China discovered in 2021 when it banned for-profit tutoring to ease the financial burden of child-rearing, often backfire, introducing new sociocultural and economic uncertainties to parents and further reducing their motivation to have children.
Compared with navigating the complicated underlying causes, subsidies offer a straightforward path, allowing politicians to claim credit for action without confronting sensitive social and cultural issues.
Population growth via immigration
Unfortunately, the short-term political gains of pro-fertility spending cannot change the facts on the ground. It may be time for politicians to start thinking deeper about how their funds could be redirected toward initiatives that can move the needle on population growth in other ways. Politicians like Takaichi, who signal new perspectives, may be able to turn expectations for change into meaningful policy shifts.
One equally straightforward – but politically fraught solution – is immigration. In East Asian cultures, anti-immigrant sentiment remains deeply entrenched. In Japan, for instance, the public often opposes political participation by naturalized citizens, driven by skepticism over their loyalty to their adopted homeland.
Yet, the example of Dubai shows that having an overwhelmingly foreign population does not necessarily lead to cultural loss or economic subjugation of native-born citizens.
The key to gaining public support for increasing foreign labor lies in education. With a concerted media campaign that clearly illustrates the benefits of Dubai-style controlled immigration, politicians may gradually reduce the stigma of promoting population growth through means other than childbirth.
In East Asian societies, the decision to have children is increasingly viewed as a personal choice, with overt, top-down messaging to encourage childbirth seen as intrusive.
But the government can fund independent media outlets that document the stories of real parents who have successfully balanced personal interests and careers with child-rearing. By showcasing relatable personal stories that frame parenthood as a rewarding experience rather than a personal sacrifice, a more pro-natal mindset could gradually enter the mainstream.
East Asian politicians’ continued insistence on spending to offset the costs of childbirth reflects an out-of-touch belief that economic concerns are the primary reason people aren’t having children. While easy to communicate, that assumption does little to resolve the end goal of reversing depopulation. Policies that aim to change minds rather than fill wallets would be a better approach.