Kolloquium: Parental Prisoners of Love: Do Low-fertility Societies Tax, Rather Than Subsidise, Their Own Reproduction?

ABSTRACT: What is the full transfer cost of rearing a newborn child to productive adulthood in Europe? We use NTA and NTTA data to estimate working-life resource transfer burdens in 12 EU countries around 2010. Going beyond public transfers (net taxes), we also value two statistically much less visible transfers in the family realm: of market goods and of unpaid household labour (time). Non-parents contribute almost exclusively to public transfers. But parents additionally provide still larger private transfers: mothers mainly time, fathers mainly market goods. Estimating transfer stocks over the working life, the average parental/non-parental contribution ratio in Europe flips from 0.73 (public transfers alone) to 2.66 (all three transfers combined). In a new Nordic paradox, the highest combined parental/non-parental contribution ratios are in famously family-friendly Sweden and Finland. The metaphoricaltax rates implicitly imposed on rearing children in Europe are multiples of the value-added tax rates in place on consumption goods. Unveiling the sheer magnitude of these invisible transfer asymmetries carries multiple implications for debates on social policy and demographic renewal. It raises the question whether low-fertility societies unwittingly tax, rather than subsidise, their own reproduction.