America now has a services funding problem that has plagued Europe for a time - nowhere near enough workers to pay for people getting government money.
Though there are now 2 workers to pay for Baby Boomer social security, compared to 42 when the system started, a new study advocates even fewer babies and more economic slowdown. But it will pay off, say scholars from the University of California, Berkeley and the East-West Center in Hawaii.
They correlated birth rates with economic data and concluded that a moderately low birth rate – a little below two children per woman – might boost a country's overall standard of living. While governments generally favor higher birth rates to maintain the workforce and tax base needed to fund pensions, health care and other benefits for the elderly, it is families that bear the most cost of having children.
"Higher fertility imposes large costs on families because it is they, rather than governments, that bear most of the costs of raising children. Also, a growing labor force has to be provided with costly capital such as factories, office buildings, transportation and housing," said UC Berkeley demographer Ronald Lee, co-author of the paper in Science. "Instead of trying to get people to have more children, governments should adjust their policies to accommodate inevitable population aging."
The authors compared government and private spending among all age groups using the National Transfer Accounts project, which studies how population changes impact economies across generations. Their calculations were based on finding the birth rate and age distribution that would best balance the costs of raising children and of caring for the elderly. For example, they found that the U.S. birth rate is close to ideal for government budgetary needs, but that in parts of Europe and East Asia, average fertility rates are so low that they reduce living standards when public and private costs are included.
"A more complete accounting of the costs of children shows only a few countries in East Asia and Europe where the governments should encourage people to have more children," said co-author Andrew Mason, an economics professor at the University of Hawaii-Manoa. "In the United States and many other high- and middle-income countries, people are having about the number of kids that are best for overall standards of living."