Family policies that reflect cultural realities, rather than one-size-fits-all assumptions, are key to reversing falling birth rates
Governments worldwide spend billions every year trying to raise birth rates, offering cash bonuses, extended parental leave, and subsidized childcare. Yet these policies often deliver disappointing results. Why do some people respond and others ignore the incentives? Our research shows that culture, specifically, religious upbringing may play a crucial role in shaping fertility responses.
In our recent IZA Discussion paper, we study a 1982 reform in the Baltic republics of Estonia, Latvia, and Lithuania, then part of the Soviet Union. The reform offered generous benefits: a cash payment at birth, job protection for 18 months, and monthly support until the child’s first birthday worth 25% of the average female wage. We compare fertility trends in the Baltics with similar Eastern European countries that did not expand benefits.
The results are striking: the reform increased the likelihood of having a child by 24% among women aged 18 to 33, but only for those raised in religious households. Women from non-religious families did not respond at all. Because the Soviet regime had largely erased differences between religious and non-religious women in education, employment, and living standards, this setting lets us isolate the cultural influence of religion rather than confounding factors like education, age, marital status, number of siblings, or childhood socioeconomic conditions.
The key lesson is that culture matters. Financial incentives do not work equally for everyone. Religious norms appear to amplify the effect of pronatalist policies, perhaps because they reinforce the value of family and childbearing. As religiosity declines across many countries, governments may find that economic incentives alone have less impact on fertility.
Although our case is specific to the Soviet context, the message is relevant today for countries facing very low fertility, high female labor force participation, and accessible childcare. In such settings, pronatalist policies that rely only on economic incentives, without considering cultural drivers like religion, may have very limited impact. Designing family policies that recognize and work with cultural norms, rather than assuming uniform behavior, will be essential for reversing declining birth rates.
© Elizabeth Brainerd and Olga Malkova
Elizabeth Brainerd is the Susan and Barton Winokur Professor of Economics and Women's and Gender Studies at the Department of Economics, Brandeis University, USA, and IZA Research Fellow
Olga Malkova is Assistant Professor in the department of Economics at the University of California, Irvine, USA, and IZA Research Fellow
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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.
Related IZA World of Labor content:
https://wol.iza.org/articles/can-government-policies-reverse-undesirable-declines-in-fertility by Elizabeth Brainerd
https://wol.iza.org/articles/female-education-and-its-impact-on-fertility by Jungho Kim
https://wol.iza.org/articles/impact-of-remittances-on-fertility by George S. Naufal
https://wol.iza.org/articles/does-religiosity-explain-economic-outcomes by Olga Popova
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