In 2015, the government of Hungary announced a major new policy: families would be given generous subsidies to buy or build new homes, and the subsidies would scale up based on their marital status and the number of children they had. This “Family Housing Allowance Program,” or CSOK (the abbreviation of the program’s Hungarian name), gives a maximum benefit to married couples with three or more children, equivalent to a $36,000 grant to buy a new home, alongside a major value-added tax deduction for each home, and a capped-interest loan for part of the home value. {snip} Given that the average salary in Hungary is only around $11,000 to $15,000 per year, an equivalently-impactful subsidy for Americans, based on our higher incomes, would need to amount to somewhere between $40,000 and $250,000. Imagine the U.S. government offered a $200,000 payout to have a third child. Do you think some people would be more likely to have that extra child? My guess is that they definitely would. I’ve written in the past that financial incentives for childbearing tend to be very expensive compared to the modest number of births they actually induce: most financial incentives are not highly effective at promoting sustainable fertility increases.
{snip} No American policymaker has ever proposed something remotely as generous as what Viktor Orban’s Fidesz party has recently done for Hungary’s families and children. I said a similar thing in a previous piece about Poland’s right-wing populist government, which virtually ended child poverty through their generous family-support policies. Europe’s populists have babies on their mind.
But with all that money being spent, we may wonder: is it having any impact?
A simple chart of Hungary’s monthly births doesn’t show any obvious boom in the last few years. Zooming in to look at annual change rates in monthly births doesn’t show any stronger boom either: in fact, early 2018 appears worse than 2017 in terms of births.
But this monthly data is crude and doesn’t account for underlying population changes. To get that, we need the total fertility rate, which estimates how many children a woman entering her childbearing years in a given year can expect to have if birth rates are stable during her lifetime.
And here we see that TFR is rising quickly. That’s unusual, as most countries around the world are currently experiencing stable or falling fertility, especially in Europe. So there probably is something interesting going on in Hungary’s fertility environment, and worth exploring further. {snip}
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{snip} Hungary’s married young women have seen fertility increases in recent years, and fertility for women ages 30-34 has seen particular growth. That’s consistent with these policies having some effect.
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Hungary’s Policy Changes Are Wide-Ranging
But that makes this next question even more interesting: if this huge cash subsidy is not causing a baby boom, what is?
First of all, in 2011 and 2012, Hungary changed the structure of their tax exemptions for children, providing new deductions that saved families between $400 and $1,500 on their tax bill per child, depending on how many kids they have. A similarly-generous deduction in the U.S., given our higher incomes and our different tax rates, would mean the introduction of a between $4,000 and $16,000 per-child tax deduction.
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Culture May Matter
There may be something else at work here: a marriage boom.
Starting around 2012, but really taking off in 2015 and 2016, women in Hungary started becoming more likely to get married. The marriage rates shown below reflect what share of unmarried women in a given age group the year prior got married in the last year. In most countries, this number is flat or falling, especially for younger women, as the average age of first marriage is pushed later and later. But in Hungary, the rise in the age of first marriage, which has been so inexorable in other countries, has actually stalled out and perhaps started to fall. The country is not just experiencing a fertility spike; Hungary is winding back the clock on much of the fertility and family-structure transition that demographers have long considered inevitable............
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Poster Comment:
In a word, yes -- very much!
Govt is god in most countries. This (and memory of the America that was) shows the US prostiticians have not one shred of an excuse for running things into the ground the way they do.
Lucky Hungary -- it's still Hungarian, and remembers what life's like under full- force jew vampirism. Shame on the west, where the salt has lost its savor and trampled it in the muck! It's a shame the language is so hard....