Baby bonuses fail to lift birth rates as research points to motherhood penalty

Countries around the world are spending billions on baby bonuses and other incentives, but research shows the payments are failing to reverse declining birth rates.

Canada's fertility rate hit a record low of 1.25 children per woman in 2024, while the average age of a mother at first childbirth has risen to 31.8 from 26.7 in 1976.

"What the research consistently finds is that these types of payments change the timing people have children, not how many they have," said Janine Rogan, a CPA and author.

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South Korea offers one of the most robust support programs, paying roughly $2,000 at birth and monthly transfers for eight years, plus tax deductions and housing loans, totalling about $30,846 per child.

Despite that, its fertility rate remains among the lowest in the world.

Hungary, Singapore and the United States have also implemented various financial incentives with little success in raising birth rates.

Canada has run its own experiment. Quebec introduced an Allowance for Newborn Children in 1988, paying bonuses that reached $8,000 for a third child.

University of British Columbia economist Kevin Milligan studied it and found a measurable increase in births, but the effect faded as the bonuses became the norm.

The payments worked under specific circumstances where they were large relative to incomes and part of a broader push to encourage francophone births.

Rogan said the cost of motherhood is far bigger than any cheque.

Time out of the workforce perpetuates the wage gap through lost earnings, forgone promotions and reduced pension contributions, a loss known as the "motherhood penalty."

By some measures, it is estimated to cost women half a million dollars over a 30-year career.

New research by Nobel Prize-winning economist Claudia Goldin argues the falling fertility rate is largely because women have gained autonomy faster than men have adapted.

Financially, women benefit more from breaking traditional household arrangements, and men benefit from keeping them, causing some career-oriented women to delay or forgo having children.

"The friction that Dr. Goldin speaks about is the absence of a credible way for men, and governments, to guarantee that a woman won’t bear the full cost of parenthood," Rogan said.

Goldin's data shows the wider a country's gender gap in unpaid care hours, the lower its birth rate.

In Japan, where women do about 3.1 more hours of unpaid work a day than men, the fertility rate is 1.36. In Sweden, where the gap is under an hour, it is 1.7.

"A cheque arrives once; the second shift arrives every day for eighteen years," Rogan said. "Until the cost of motherhood is shared, between partners, employers and the government, no amount of money at the hospital door will move the birth rate."

With files from The Globe and Mail