In an October 20, 2006 article by Marcus Walker in the Wall Street Journal, a young European couple discussed why they were not having children. “They didn't want to start a family because it would have cramped the couple's lifestyle,” the article explained. “[They] are living a full life, traveling a lot.”

Their government’s answer? Pay them to have more babies.

When politicians attempt to rally the public to “do your patriotic duty tonight,” they are generally referring to something like turning off the lights in an effort to conserve energy. Lately, however, the phrase has taken on a new meaning for countries such as Australia. The Australian finance minister has begun to urge parents to “do your patriotic duty tonight” in a desperate attempt to increase the birth rate.

The Wall Street Journal’s “In Estonia, Paying Women to Have Babies Is Paying Off” by Walker and “Germans Get Incentives to Have Babies” by Graham, illustrate that governments are starting to recognize that their countries are on the verge of an economic catastrophe if they can not get their people to reproduce. This demographic change will undermine economic growth and public finances as a decreasing work force battles to support a sharply rising number of retirees who are living longer. To prompt a rise in birth rates in order to save their economies, some countries have begun to provide economic incentives to new parents.

Ironically, it is the economic success of nations which has caused this demographic problem. As a country develops and grows wealthier, it will typically see a decline in birth rates. The decline of a country’s birth rate can be attributed to a number of factors such as the higher costs of raising children in a developed (more expensive) economy. According to Walker other factors include: “greater economic opportunities for women [and] advances in birth control…have made reproduction a matter of choice rather than accident; and the spread of ideas about individual freedom and happiness…are hard to reconcile with caring for a large family.” The Journal reports “the fertility rate in the 30 countries of the Organization for Economic Cooperation and Development, the club of the world's leading industrialized democracies, was only 1.6 in 2005, down from 2.4 in 1970.” This is far below the 2.1 children per women needed to keep the population from shrinking.

In 2001, the United Nation’s annual world population report showed that Estonia was one of the fastest shrinking populations on earth. Its birth rate had dropped to an alarmingly low level of 1.3 children per women, much lower than the former birth rate of 2.2 under communist rule. At this rate, Estonia was at risk to lose half of its population by mid century. In an attempt to save its rapidly shrinking population, the Estonia government began a bold economic incentive program allowing working women who take time off after childbirth to collect their entire monthly income for 15 months.

Germany has begun a similar program. A recent government study forecasted Germany’s population will drop by as much as 16 percent by 2050, a trend which will sap the economy of its workforce and undermine the state pension system.

The German birth rate has not been this low since WWII, when the country lay in ruins. Germany’s government has created the "Elterngeld" or "parent money" program in light of this data. Beginning in 2007, adults who stop working after childbirth will continue to receive up to two thirds of their net wages, or up to $2,375 a month, for one year. Low earners can receive up to 100 percent compensation for lost wages.

Demographers disagree on the effectiveness of using economic incentive programs to raise birth rates. Some argue that instead of raising the birth rate the economic incentives only prompt women to have a child earlier. Because of the time lag involved in judging such programs, the effects of these programs will not be known for years. Walker explains that “only after the current generation of young women passes menopause will it be clear whether they had more children in their fertile years than women of an earlier age group.”

Despite government efforts, the economic incentives to have a child will not be as effective as people might hope. The “reward money” being paid is not nearly enough to raise a child or compensate for all of the lost wages of one of the parents. The decline in birth rates urbanized, industrialized nations is the effect of a long-term changes that encompasses many different factors, including a desire for more leisure time, the lengthening of formal education, careers for women, shifting social and religious views about the importance of marriage and family, and the change in how children fit in the family structure – from added benefit as a hand on the farm to a drag on finances in the city. While government incentives might increase the affordability of raising children ever so slightly, the government isn’t going to come to your home in the middle of the night to feed your crying baby.

WSJ - "Paying Women to Have Babies is Paying Off"

AP - "Germany Baby Bonus"