Planet Money - Shopping for parental benefits around the world

Episode Date: March 1, 2024

It is so expensive to have a kid in the United States. The U.S. is one of just a handful of countries worldwide with no federal paid parental leave; it offers functionally no public childcare (and private childcare is wildly expensive); and women can expect their pay to take a hit after becoming a parent. (Incidentally, men's wages tend to rise after becoming fathers.) But outside the U.S., many countries desperately want kids to be born inside their borders. One reason? Many countries are facing a looming problem in their population demographics: they have a ton of aging workers, fewer working-age people paying taxes, and not enough new babies being born to become future workers and taxpayers. And some countries are throwing money at the problem, offering parents generous benefits, even including straight-up cash for kids. So if the U.S. makes it very hard to have kids, but other countries are willing to pay you for having them....maybe you can see the opportunity here. Very economic, and very pregnant, host Mary Childs did. Which is why she went benefits shopping around the world. Between Sweden, Singapore, South Korea, Estonia, and Canada, who will offer her the best deal for her pregnancy?Help support Planet Money and get bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

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I am pregnant. Thank you. I also have a toddler, so I've already been through the having a kid rigmarole here in the U.S., which is how I know it is not a good deal. Having a kid in the U.S. is extremely expensive. Our government is one of just like a handful of countries worldwide that does not offer any form of paid parental leave. We have functionally no public daycare. So knowing what I know, it would be irrational of me to have more kids here if I can avoid it. Especially when it is my understanding that other countries are offering way better deals.

Tons of benefits and straight up cash for having babies. And one of the reasons why there are such good deals out there is because governments around the world are struggling with labor force participation. Having enough workers and getting the most possible out of them. And maybe the biggest driver? A lot of countries are facing a problem in their population demographics. They have a ton of aging workers and not enough new babies being born to become future workers and taxpayers. So I have something they need, babies. They have something I need, money, social services, and functioning public infrastructure. Let's make a deal. Hello and welcome to Planet Money. I'm Mary Childs. And today on the show,

we are going to go around the world shopping for the very best deal so you don't have to. And along the way, we will find out why those deals exist in the first place, the history behind these somewhat creative solutions to what could be existential problems. We're going to go to Sweden, Singapore, South Korea, Estonia, and Canada. Let's find out who's going to give me the best bang for my offspring. Do you want in on a secret? Like why your favorite pop star is so popular? Or why a makeup fad is suddenly sweeping your feed? It's that none of these things happen by accident. On the It's Been a Minute podcast, I don't just tell you what's trending. I dig deeper to find out why. Join me, Brittany Luce, on It's Been a Minute from NPR. On It's Been a Minute, we talk to up-and-comers and icons of culture. From Barbra Streisand. You're such a wonderful

interviewer. To Tracee Ellis Ross. Your questions were so wonderful. And Christine Baranski. Oh, thank you for your wonderful questions. Here are the questions these icons loved to be asked. Listen every week to It's Been a Minute from NPR. So we are embarking on this quest to respond rationally to the incentives offered worldwide to parents and families. And this is to some degree window shopping. I'm not a citizen of every country, so I won't be eligible for a lot of these benefits, at least not in the near term. And my situation is very near term. But I don't know, maybe they're willing to bargain. Let's find out. So first, I want to set some parameters for what we are shopping for. There are three big things that I'm looking for. The number one is a nice, long, guaranteed paid leave. A thing we just don't have in the United States. Anything shorter than three months, in my opinion, is inhumane. So that is my minimum.

The second thing I'm looking for is sort of the absence of a thing because no country has solved the career injury of motherhood. You can get mommy tracked with dead-end assignments. A woman's pay takes a hit after becoming a parent. Incidentally, men's pay goes up. So maybe as a clumsy proxy for this, we can use the pay gap between men and women. The smaller the pay gap, the better. For reference, in the United States, The smaller the pay gap, the better. For reference, in the United States, it is 16%, meaning on average, women make 84 cents for every dollar a man makes. Number three, childcare. So I can do my fulfilling and fun job.

I currently pay $2,000 a month for preschool for one child, and it was the Hunger Games to get into a program at all. I have heard that elsewhere, other governments provide child care or subsidize it, and it's good, and I'm curious. Okay, so now I know what I want. The bare minimum, at least three months leave, ideally more, a reasonably small pay gap, and affordable child care. Let's see what we can find. First up, Singapore. Because one of the most compelling things about all these countries trying to incentivize more babies is that a lot of them will just straight up give you money. Cash bonuses for babies. There are few incentives economists like more than cash. And Singapore's is the biggest cash bonus I have seen, as much as

$24,000 in cash and matching savings. Also on offer for me in Singapore? Three months parental leave, government-subsidized childcare, a gender pay gap of 14%, and that giant cash bonus. So we are already doing better on all fronts than in the United States. Of course, Singapore does not offer all this out of the kindness of its heart. It's trying to solve a demographic problem. People in the country are having fewer and fewer babies. For the government, it has been a decades-long struggle. I mean, this is partly a happy problem.

It's a consequence of success, right? This is behavioral economist Donald Loh. He worked for the Singapore government for almost 15 years. And the history behind all of this, the way Singapore got to be handing out that cash bonus, starts like 50 years ago in the 70s, when the worry was the opposite. Too many babies. At that time, we were afraid that we wouldn't be creating enough jobs. We didn't have enough land to go around.

And our economy, our resources may not be able to keep up. Singapore in the 70s was focused on getting people to have fewer children. The country's founding prime minister, Lee Kuan Yew, he was the one in the 70s who said the birth rate is still too high, so let's have a stop at two policy. Stop at two kids. Singapore started rolling out policies, disincentives, to discourage people from having kids.

Like your taxes, parental leave, and hospital costs worsened with subsequent kids. But beginning in the 1970s, Singapore also started enjoying strong economic growth. And the more economic development, generally the better the education and employment opportunities for women. And the more education women get, the fewer babies they have. With rapid economic development, birth rates were going to fall on their own. And so you pile on these incentives, these punitive tax measures and other forms of punishment for people who have more than two children, you're going to have an even larger fall in birth rates than you would already have. People were stopping at two, and then they stopped at one, and then zero. Eventually, the prime minister was like, hold up, this is a bad trajectory.

We are on track for too few children, which through an economic lens can become catastrophic. It means fewer future workers, which means lower future consumption. And it means who's going to pay your future taxes? Who's going to fund all those pensions you promised? There's a name for this problem. It is the dreaded inverted pyramid. Lots of retired old people at the top and fewer working age people supporting them and even fewer babies. This is looming in Italy, in China, lots of places. And it can create all kinds of problems. So Singapore's government was like, yeah, let's uno-reverse this. Suddenly in the mid-80s, the policy was flipped.

The prime minister in 1983 made a big speech during the National Day rally and said, our new challenge now is to reverse the falling birth rates. They started saying, have three or more parentheses if you can afford it, close parentheses. Like that was a real government slogan. They rolled out programs to incentivize people to have kids. What are called pro-natalist policies. Better parental leave, tax benefits, cash payments at birth. Maybe people get money for having babies, they will have babies.

Tax benefits, cash payments at birth. Maybe people get money for having babies, they will have babies. But Donald says it's really hard for a government to pull off a huge policy and culture 180 like that. Especially one that feels so overtly utilitarian. And for all that, Singapore's fertility rate has fallen basically continuously. It is now one. That's how many kids on average a woman will have over her lifetime. Which Donald says,

hey, maybe there's a more positive way we could view this. I think that it is actually very optimistic. It's very promising in the sense that instead of looking at this with gloominess, we should be saying that actually it marks older populations, people living longer,

women having more options and choosing to have fewer children. That is a triumph of human development. That's a triumph of economic development. But if you're a government worried about your population, that number is too low. The magic number you want is 2.1. That is the replacement rate. How many births are necessary to maintain a stable population? Replace the parents plus a little extra for safety. Anything less than that and you are demographically in trouble. So in Singapore, they're considering other options. I think government has more or less given up now. And it says we'll simply focus on maintaining the population. And since we can't

do it through having citizens have enough children, we will just have to allow more immigration. Immigration. Imagine that. If you need workers and there are people who want to come into your country and work, I don't know, it makes sense. And for Singapore, this has been effective. Its population would be declining were it not for immigration, which is great for me personally, a potential future immigrant, though I would need to be there for 10 years before I could become a citizen and qualify for all of the benefits. And as you know, I do not have 10 years. So I asked Donald what he thought about where Singapore should fall in my rankings. Oof.

I wouldn't say it's particularly generous. Really? But the cash bonus? It's like 24 grand. Yeah, but I mean, you know that the cost of raising a child, especially in an expensive city like Singapore. Oh yeah, I got to pay for an apartment. Okay, so for my narrow purposes today, it's actually not a resounding recommendation.

On to our next country. Basically, every single person we talked to for this story referenced the Nordic countries as the leaders in parental benefits and support. So next up, Sweden. I called up Niklas Lofgren at the Swedish Social Insurance Agency. Oh, I've been working with these issues for at least 20 years now.

So you've seen children grow up all the way? Yep, yep. Wow. Any successful cases that you can think of? My own, of course. His kids are now 27 and 29. That is very big. Huge success. So I explained to him what was on offer, my problem-tunity. So I am here to try to see if we can make a deal. I have babies. You have social support programs. Let's see what we can do. Yep, just come over. Move to Sweden immediately. Okay. In Sweden, the deal is parental leave is very long. You get 16 months, the first 13 at 80% pay. Government-provided daycare starts at one year old.

You are guaranteed a spot, and it is at most $163 a month. But to me, the most compelling thing about Sweden's offer is actually embedded in why Sweden started these benefits in the first place. It's a story of a quest for gender equality. And that begins decades ago in the aftermath of World War II. Niklas says the country had two big problems it wanted to solve. First, a labor shortage. Not enough workers. After the Second World War, we needed more people in the industry.

We needed a bigger labor force. And therefore, we saw that we needed more women to join the labor force. And the government saw an easy solution. There was a whole cohort of people who weren't in the formal workforce. At the time, Sweden had one million housewives. So Sweden was like, why not get all those housewives in the labor force? But at the same time, most women started to ask questions like, OK, if we should attend the labor force, who will look after the children then?

Great question, women. So Sweden started offering child care centers. But then women were like, wait, so we're supposed to go to work and then come home and also do work? Women started to ask questions like, well, if we should work two jobs, why should men only work one job? Why should they, like, just work in the labor force and not at home? Great question again, women. So Sweden realized if it wanted more of its people in the labor force, if it wanted women workers, it would need to promote gender equality. And one way Sweden tried to do that was to entice men to do more at home. It created an incentive for them to take parental leave.

And research does show that men taking leave helps them bond with the baby. The babies obviously love it. But more relevant for our purposes, it helps foster equality at home in unpaid labor like chore splitting. And it makes leave-taking normal. If men take leave, that can reduce how much women get punished when they take leave. So one incentive Sweden came up with is this. Both parents get 240 days, and a big chunk of those days are non-transferable. Use it or lose it. This is the pappa monadar, or daddy quota. And it's been pretty effective.

Men in Sweden now take about 30% of the parental leave, up from 0.5%. Guess what else? Today we have one of the world's highest labor force participation, not only for the population in total, but also a very small gender gap between men and women. So I guess over 80% of all women work in the labor force. Do you know your pay gap off the top of your head? I guess pay gap is about 7% or something like that. Seven single digits?

Yes, somewhere there. I didn't know that was possible. So Sweden made huge progress getting more women into the workforce, but it had that second problem. That dreaded inverted pyramid was looming. Its fertility rate was too low. So to incentivize more children, Sweden started giving parents cash every month per kid. For children, Sweden started giving parents cash every month per kid. But pretty close before we introduced the benefit, the fertility rates had gone up already.

So we didn't see that that reform affected actually the fertility rates. The one thing Sweden actually has noticed that clearly impacts fertility rates? Macroeconomic conditions. If the economy is doing well, more babies. If it crashes, fewer babies. And Niklas says Sweden isn't overly troubled by the fact that they don't really know how effective the policies actually are. We don't have evidence for the connection, so to speak. But we believe that a system that is generous, that also aims at gender equality, those systems will also have good fertility rates. And I would never imply causation, but Sweden's fertility rate is 1.8. Not replacement level, but not too far off.

And Nicholas says Sweden feels pretty satisfied about its two goals of more women in the workforce and more babies. This is a technical question. How long do you have to live in Sweden to get the benefits? Just wondering, for a friend. Actually, if you are entitled to live here, you will get the benefits like child allowance, housing allowance, and maintenance support and so from day one, actually. So if you're allowed to live here, you will get the benefits. Yes so from day one actually so if you're if you're allowed to live here you will get the benefits yes from day one i could just move right now yes you will get it from day one but the insurance is like parental insurance and so uh you have to have been working

here for at least 240 days before you're insured. I don't have 240 days. No, so after 240 days, you will be covered. But not before that. Yeah, that is not ideal for my particular situation. Let's keep going. After the break, a country that can point to a policy that literally caused more babies. And a country that takes a little bit from Singapore and a little bit from Sweden.

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conversations about race and identity don't begin or end with the news cycle. That's because we know race and identity impact every person and influence every story. We're getting into all of it with new voices each week on the Code Switch podcast from NPR. Okay, the country I have heard the most about in the providing parental support arms race, and one of my leading contenders here is South Korea. South Korea has been absolutely throwing benefits and money at its fertility rate,

which is currently 0.7, well below replacement, that magic number 2.1. They have spent over $200 billion on programs in just the past 16 years alone. So here's the deal. A robust leave, a year for each parent, a $1,500 cash bonus at birth, great daycares. It's like all the perks of Sweden, plus a cash bonus like Singapore, albeit smaller. And this kind of sounds like the total package, like maybe the best deal so far. And it just so happens we know someone who's had kids in South Korea. Friend of the show Elise Hu, host of TED Talks Daily. I opened NPR's Seoul Bureau in 2015 and lived there and had two children there. At a natural birthing center. She says it was lovely. I actually credit Korea for such really memorable and poignant experiences in giving birth. The perks don't end there. The lactation stations are giant and people are very

kind to children. You know, kids eat free everywhere. There's giant kid cafes. Moms get like good parking spots and designated places on the subway and all these things. There's these knots towards wanting to be family friendly. But then culturally, it's still very hard for women to make that decision. Hard to make the decision to have kids, which sounds like the big problem in South Korea. It has all these great policies, but something's just not sticking. Women are dropping out of the workforce after having kids at an alarmingly high rate. And even though South Korea has a kind of daddy quota policy like Sweden, men are just not

taking leave that much. So you can bring these policies over, but they don't necessarily work if all of your cultural norms, both at work and within family units, within homes, don't change along with it. Because the norm in South Korea is this very intense office culture. You succeed by working long hours, which is one approach for getting more out of your workers. Like work is more of a sprint versus in Sweden for getting more out of your workers. Like, work is more of a sprint versus in Sweden where it's more of a marathon. Elise told me this is compounded by gender dynamics at work. For decades, Korea has had the widest pay gap of the 38 most developed countries in the world. Women there get paid 30% less than their male counterparts. And gender dynamics at

home don't help. Data show men in Korea do the least amount of housework of everyone in those 38 countries. And that is not what I want personally. And it's not what a lot of women in South Korea want personally either. There's an entire movement of feminists in South Korea that are like no marriage, no children women. And part of the reason is because they don't want to be cogs in a system. They don't want to feel as though in this structure that is already really hard on women that they're just here to produce babies. So all of this was not what I was expecting, honestly. Despite the great offer on paper, I'm going to have to reconsider where South Korea is in my rankings. So next up, we're going to go to a country with one of the longest leave policies in the known universe, Estonia. My name is Kaira Saarab, and I'm director general of a labor inspectorate.

I told Kaira about my mission to find a new home where I could afford all of my children. I hope it's Estonia, but you have to consider we have good winters. Everything else is great. No such thing as bad weather, only bad clothes. Is that the saying? Exactly. That's what we say. Here's Estonia's offer.

18 months of leave at 100% pay. There is a salary cap, but 18 months. Also, affordable daycare starting at 18 months. Great, great, great. I'm listening. Now, Kaira says Estonia has a slightly different reason for offering these benefits. We were part of the Russia basically like a little bit more than 30 years ago. And when we gain our independence, you know, the importance to our own country, a small country, and you want to help repopulate basically Estonians. The current government, she says, is cool with immigration, especially if those immigrants can with immigration, especially if

those immigrants can come work, especially in the tech sector, and pay taxes. But the explicit motivation behind these pro-natalist policies was more Estonians, which hits on one of the very real undertones of all this, not just here, but everywhere. The goal is a specific type of baby. Countries are aiming for more babies from their native population when there are plenty of other great babies all around the world. But, Kaira says, since Estonia started offering these benefits, it's made progress on its goal of more Estonians. Its fertility rate has climbed from 1.37 in 2003 to 1.77 now. And there's this one policy that they say has been demonstrably effective at getting more babies. It's what Kajder called a speed benefit. Normally, when people go back into the labor force,

they face that motherhood penalty. They might need to work part-time. They might not go back at all. Estonia's speed benefit means if parents have their next kid fast enough within three years, for this next leave, they get 100% of their pre-first baby salary. This is the one thing you can actually measure the most. And these researches have been shown the second and third childbirth is being increased the most. So the speed benefit actually working and I can see through my friends as well. Everybody who has second or third child, they're pretty close age gap. Okay, that is very cool from like an economics perspective and an Estonia demographics perspective.

But for me personally, the speed benefit's kind of irrelevant because I'm definitely done after this. And I am a little concerned about daycare since it starts at 18 months. That might be a challenge if I want to get back to work before then. So on to our last country. I called up Jenna Suds, the Minister of Families, Children, and Social Development. In Canada, the greatest country in the world. Interesting. I'm going to need substantiation for that enormous claim, but I'm open to it. She is an economist. I did do my master's degree in economics here in Ottawa.

And frankly, consider myself an economic minister given the portfolio that I lead here. Ooh, go on. Reality, right? When families succeed, when parents succeed, it contributes to our economy, full stop. And so many of the so-called social policies that we put forward here in Canada are really, really strong economic policies. Jenna jumped right into the details. First up, which actually for me is the main draw for Canada, child care. Because Canada started offering $10 a day child care. And those are Canadian dollars.

So in U.S. dollars, it's more like $7 a day, which is far less than what Jenna had to pay in Canadian dollars when she was putting her kids through childcare. It was a mortgage payment. You know, families often were spending at least $1,500, if not more, a month per child. You know, that delta between what they're paying now versus what you would have paid pre-policy is actually their mortgage payment. Literally still the case for me that my mortgage is less than my child care for one child. In the course of reporting for this episode,

I was surprised to learn that affordable child care might actually be my number one priority. It's what's causing me the most pain right now, getting onto years-long wait lists for care I can't afford. $7 a day sounds so nice. It's actually a little more expensive than some of the other countries in our cohort here, but it is still a huge improvement for me. And it starts earlier than the others, when the babies are littler. Canada sees all this as an investment. It's calculated that for every dollar it invests in early learning, it gets back

a lot more, anywhere from $1.50 to $2.80, depending on socioeconomic factors. That's from the child's now-enriched development paying off down the road and from parents rejoining the workforce. Now we're seeing here in Canada, the women's participation in the workforce has reached record levels at 85%. And to contrast that, that's 9% higher than in the U.S. I feel a little called out. I do. I'm sorry, but I've got to point out we do a great job at this in Canada, and it's because we've prioritized it. And all this is so great, Jenna says.

But Canada still has to think about keeping its population stable. Also notably, you can't put babies to work for a while. So any near-term gaps in the labor market require a more immediate solution. We're welcoming on average about 500,000 people a year right now. And they're helping where we need them. They're contributing to our economy. It's miraculous, frankly. Music to this future immigrant's ears.

I hope they desperately need podcasters. Are there any other things I should consider? Like, why Canada? You know, I think you should get your visa application in soon and get here. Okay. TikTok. And that completes our world tour. We went to Singapore, Sweden, South Korea, Estonia, Canada, and we got some really compelling offers.

It is time to declare a winner. compelling offers. It is time to declare a winner. And I will say there are so many moving parts to each of these packages and each part is kind of difficult to compare, if not impossible. But in the end, I feel like the best all-around packages were in Canada and Sweden. But then I looked up the pay gap in Canada and it is not better than in the U.S. So I guess that means I am moving to Sweden. It's always tough to compete with a Scandinavian country on these grounds. But there are two wrinkles here. Countries may want more babies, but they don't make it easy to emigrate. Generally, I would need proof of work or at least income or wealth. And I have not mentioned this to NPR beyond this very podcast, so I'm not sure how interested they are in sponsoring my work

visa. And the second wrinkle, it is too late for me. I can't just show up today and get paid to be on leave. I would have had to be paying taxes. I would, however, be eligible for child care immediately, which is material because did I mention I'm having twins? So yeah, in my case, everything's a little extra acute. And this world tour wasn't comprehensive. We considered so many countries, but some didn't really stand out or, frankly, didn't get back to us in time. So if you are a country and you want to offer a better deal, call me. I'm open. We are at Planet Money on most social platforms. We are planetmoney at npr.org.

A lot of the prices you see at the supermarket make so little sense. Like, why do stores charge the same amount for milk that will expire in three days as they do for milk that won't expire for another two weeks? And that is a puzzle, right? Why? Why aren't they changing the price? Don't they realize these dynamics? Coming up, we visit the grocery store of the future to see what it would be like if supermarket prices actually did make sense. That's next time on Planet Money.

The James Sneed produced today's episode. It was edited by Jess Jang, fact-checked by Sierra Juarez, and engineered by Sina Lefredo. Alex Goldmark is our executive producer. A huge thank you to Sari Kerr for holding my hand through this entire process. Thank you also to Jane Welfogel, Mary Brinton, Katarina Eng, Peter McDonald, Liana Simstrom, and Anya Nilsson and Abigail Leonard. Abigail's book, Four Mothers, is coming out in 2025. I'm Mary Childs. This is NPR. Thanks for listening. On the Code Switch podcast, conversations about race don't start and stop with the news cycle.

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