Finland is the New Sweden

It’s fairly common to hear praise for low birthrates. We associate low fertility with high prosperity, more choices for women, and fewer obligations for men. Jason makes the point in a comment on a recent post:

Keep in mind, though, that countries with low birthrates tend strongly to be countries with high standards of living, high levels of education, and relatively equal treatment for women. A low birthrate is a sign of a society that has matured and that it cares about the autonomy and dignity of the individual. It is, in other words, a good thing.

Countries with high birthrates tend to be rather dismal, particularly if you’re female, but also even for the men.

This view makes some intuitive sense. If true, it would even provide a nice bit of consolation as we slide into demographic twilight. The problem is that it’s not supported by the data. A large cause of the low birth rates we now see across the west reflect “suppressed demand” for fertility created by government policies and work arrangements that force women to forgo the bearing and rearing of children.

The clearest demonstration of this fact came when Finland changed its family policies in the early 1980s. For two decades up to that point it had followed a roughly Swedish model that promoted government-run daycare and one-year work leaves for women. The problem with this system was that it made difficult for women to leave the workplace and take care of their children, essentially forcing them to re-enter after their 12 months were up.

The praise for this type of policy arrangement is particularly maddening when you look at some of its other little-discussed effects. Few realize Swedish women are disproportionately employed by the public sector, while the vast majority of men work in the private sector. This pattern of segregation happens to resemble the one that emerged during the twentieth century in some American locales where the government was the only employer that did not discriminate against black job applicants. A major cr0ss-country comparison of gender segregation in the workforce showed that Nordic countries like Sweden were as or more gender-segregated than China, Malaysia, and India, and were exceeded in gender segregation only by countries in the Middle East and North Africa. (Much to everyone’s surprise, the two OECD countries with the lowest levels of gender segregation were the U.S. and Canada.)

Gender Segregation in Sweden, graph from a paper by Ulla Bjornberg and Lillemor Dahlgren.

In addition to being employed disproportionately by the public sector, Swedish women are further clustered in the areas of education and care-giving. They are caring for the children of others instead of their own.

Finland modified this Swedish model by offering parents the additional option of receiving a Home Care Allowance (HCA), a taxable stipend they could use to either leave the workforce or else hire child care of their choosing. The stipend lasted for three years after the child’s birth, allowing many couples to space birth so that one parent (almost always the woman) would be able to leave the work force for a decade or more.

To the surprise of Finnish lawmakers, the HCA proved to be wildly popular. Two-thirds of eligible women signed up for the scheme initially, and by the 1990s, three quarters of all eligible women chose the HCA over Finland’s high-quality government-run daycare. Researcher Catherine Hakim (whose work introduced me to this data) draws the following conclusion:

The two pioneering homecare allowance schemes in Finalnad and France confirm that most mothers prefer to care for their young children themselves, and that financial considerations, rather than a strong personal commitment to paid work, are often the prime motivation for mothers’ return to employment soon after childbirth…  (Hakim, Work-Lifestyle Choices in the 21st-Century, pg. 234)

The other unanticipated result of the new Finnish program was an increase in fertility that gained momentum with the increase of the Home Care Allowancein 1987. With an increased menu of choices, Finnish women opted overwhelmingly for the one that allowed them to have and care for their own children. Finland and Norway (which adopted a similar model) have both seen a sustained increase in the number of women choosing to have a second, third or fourth child.

What Finland’s experience suggests is that when given the option, few people prefer the autonomy touted by some followers of the liberal tradition and instead prefer the ties that bind — the sacrifices and rewards involved in child-care and family life.