ECONOMY
Can Putin’s Russia Have More Children, Boost Growth and Reduce Poverty All at Once?
March 20, 2024
Tatiana Rybakova
Journalist and writer
Journalist Tatiana Rybakova wonders whether the goals announced by Putin in February – increasing the birth rate, boosting economic growth and reducing poverty – are compatible. Experts believe that the current measures will hardly increase fertility; rather, they will speed up the birth of already-planned children, while another “demographic hole” awaits.
In his address to the Federal Assembly on February 29, President Vladimir Putin basically outlined his political platform. As no one doubted that he would remain in office for a fifth term, this platform looks set to become law. In fact, preparations are already underway: the government is considering progressive tax rates (so that there are no rich people) and tax deductions (so there are no poor people), while subsidized mortgages for families have been extended, starting at 6% annually, and officials and MPs are vying with each other to give women advice on how to have children (here and here) – the message being have more and earlier.
Tatiana Golikova, Deputy Prime Minister for Social Policy, Labor, Health. Source: Wiki Commons
Demography and economics
The first question is: how compatible are economic growth and increased birth rates? After all, if women heed the call of Deputy Prime Minister Tatyana Golikova to give birth to their first child before the age of 24, and not after 26, as now, then they will start climbing the career ladder at best by the age of 30. Moreover, it is possible that they will have to retrain or accept a less high-skill and less highly paid job: after all, they will have to go on maternity leave right after college, and nowadays knowledge becomes outdated quickly.
If women follow Putin’s call to have three children, most of them will have to forget about their careers altogether: kindergartens are few and far between in many regions; hiring a nanny is beyond the means of most Russian families; and grandmothers, because of the pension reform, often still work, while husbands are usually unwilling to split the responsibilities.
Calls for women to have more children are not compatible with demands for higher economic growth, says University of Wisconsin-Madison professor Vladimir Gimpelson. Still, it is naive to expect that women will heed these calls.
“All world economic history tells us that economic development is correlated with a decline in fertility. For example, in the fast-growing countries of East Asia – South Korea, Singapore, China, Taiwan – the total fertility rate is significantly below the replacement level. To replace the population it must be above 2.0. In South Korea it is below 0.8; in other countries in the region it is about 1.0. No matter any ‘traditional values,’ economic development has brought this figure to a minimum.
The first question is: how compatible are economic growth and increased birth rates? After all, if women heed the call of Deputy Prime Minister Tatyana Golikova to give birth to their first child before the age of 24, and not after 26, as now, then they will start climbing the career ladder at best by the age of 30. Moreover, it is possible that they will have to retrain or accept a less high-skill and less highly paid job: after all, they will have to go on maternity leave right after college, and nowadays knowledge becomes outdated quickly.
If women follow Putin’s call to have three children, most of them will have to forget about their careers altogether: kindergartens are few and far between in many regions; hiring a nanny is beyond the means of most Russian families; and grandmothers, because of the pension reform, often still work, while husbands are usually unwilling to split the responsibilities.
Calls for women to have more children are not compatible with demands for higher economic growth, says University of Wisconsin-Madison professor Vladimir Gimpelson. Still, it is naive to expect that women will heed these calls.
“All world economic history tells us that economic development is correlated with a decline in fertility. For example, in the fast-growing countries of East Asia – South Korea, Singapore, China, Taiwan – the total fertility rate is significantly below the replacement level. To replace the population it must be above 2.0. In South Korea it is below 0.8; in other countries in the region it is about 1.0. No matter any ‘traditional values,’ economic development has brought this figure to a minimum.
“An educated urban woman, regardless of whether she works or not, will not give birth to more children – she just does not need that.”
Pension System Russia’s population pyramid. Source: PopulationPyramid.net
She will pay more attention to one or two children, says Gimpelson. This is the general trend, though it is playing out at different speeds in different regions. “The birth rate remains high in Africa, but it is starting to decline there too – this is a global pattern,” he adds.
According to demographer Alexei Raksha, however, the loss of women from the workforce during maternity leave and parental leave has little effect on the economy. “Let’s count. We have about 74 million employed people in Russia. In 2021, 1.4 million children were born, in 2022 there were 1.2 million women on maternity leave. In 2022, 1.3 million children were born, which means that approximately 1.1 million women are now on maternity leave. This is 1.5% of employed people. Obviously, some women take longer to get back to work – some until the child is three years old, others even longer – but even counting them it is no more than 2% of the workforce. It is not such a big factor and does not slow economic growth much,” he says.
Having many children, notes Raksha, also does not greatly affect the labor market: less than 400,000 newborns last year are their parents’ third or later children. And though compared to 2006, the last year before the Maternity Capital program was introduced, there has been a 150% increase in such newborns, this still does not take out very many women from the labor market.
“We exaggerate the figures for modern birth rates too much: even the relatively high share of large families in Russia is not enough to have a big impact on the labor market. It is much more affected by the fact that hundreds of thousands of men are now fighting, not participating in [economically] productive activities. And even more impactful than the war is the ‘echo of the 90s’ – the consequences of the ‘demographic hole’ back then,” says Raksha.
Can children be ‘bought?’
Economics also factors into families’ planning of when to have children and how many. “Standard economic theory suggests that families make a child quantity-quality tradeoff,” Gimpelson points out. “The more educated people are and the more they earn, the higher the opportunity cost of having children. The choice is gradually shifting in favor of ‘quality.’ We see this in statistics for all countries, and Russia is no exception.” All developed countries face this, and though many governments have tried various pronatalist measures, “buying” fertility has not worked anywhere.
Experience has shown that for the average family, two children is the most they can have before their quality of life falls below that of their income stratum. Excluding the ethnic republics in the North Caucasus, A three-child family is already relatively rare. More than two children often means poverty. This can be seen even in the layout of apartments: they generally have a maximum of three rooms (two bedrooms), i.e., they are suitable for families with one or two children. Four-room apartments (three bedrooms) are rare outside of high-end buildings – but there the third bedroom is an office or a guest bedroom.
According to demographer Alexei Raksha, however, the loss of women from the workforce during maternity leave and parental leave has little effect on the economy. “Let’s count. We have about 74 million employed people in Russia. In 2021, 1.4 million children were born, in 2022 there were 1.2 million women on maternity leave. In 2022, 1.3 million children were born, which means that approximately 1.1 million women are now on maternity leave. This is 1.5% of employed people. Obviously, some women take longer to get back to work – some until the child is three years old, others even longer – but even counting them it is no more than 2% of the workforce. It is not such a big factor and does not slow economic growth much,” he says.
Having many children, notes Raksha, also does not greatly affect the labor market: less than 400,000 newborns last year are their parents’ third or later children. And though compared to 2006, the last year before the Maternity Capital program was introduced, there has been a 150% increase in such newborns, this still does not take out very many women from the labor market.
“We exaggerate the figures for modern birth rates too much: even the relatively high share of large families in Russia is not enough to have a big impact on the labor market. It is much more affected by the fact that hundreds of thousands of men are now fighting, not participating in [economically] productive activities. And even more impactful than the war is the ‘echo of the 90s’ – the consequences of the ‘demographic hole’ back then,” says Raksha.
Can children be ‘bought?’
Economics also factors into families’ planning of when to have children and how many. “Standard economic theory suggests that families make a child quantity-quality tradeoff,” Gimpelson points out. “The more educated people are and the more they earn, the higher the opportunity cost of having children. The choice is gradually shifting in favor of ‘quality.’ We see this in statistics for all countries, and Russia is no exception.” All developed countries face this, and though many governments have tried various pronatalist measures, “buying” fertility has not worked anywhere.
Experience has shown that for the average family, two children is the most they can have before their quality of life falls below that of their income stratum. Excluding the ethnic republics in the North Caucasus, A three-child family is already relatively rare. More than two children often means poverty. This can be seen even in the layout of apartments: they generally have a maximum of three rooms (two bedrooms), i.e., they are suitable for families with one or two children. Four-room apartments (three bedrooms) are rare outside of high-end buildings – but there the third bedroom is an office or a guest bedroom.
“Yet the number of children per family can be raised if there is no correlation between having many children and poverty.”
“If you pay a basic income until the child reaches adulthood, large families will not risk poverty at all,” Raksha is convinced.
According to Raksha, demographic measures have a much bigger impact on the birth rate than social measures: for example, maternity capital turned out much more effective than benefits. “Benefits are needed to reduce poverty, but maternity capital is needed to raise the birth rate. But since maternal capital is now only paid for the first child, its effectiveness suffers. Because the birth rate of first children does not depend on demographic measures: almost everyone who wants children in principle has a first child; the only thing is that the birth date might be moved up. For second [children], incentives are already needed,” he says.
As for poverty, expanding benefits for children can reduce it to some extent, agrees Gimpelson, but there is a problem: “still, families with small children are generally young spouses. What is the reason for their poverty – the presence of children, lack of work experience or low pay? We must first establish the actual cause, maybe then the ‘treatment’ can be made more effective.”
There is a simple way to increase the birth rate, Raksha claims. “Two million rubles of maternity capital for the second and third child. The birth rate will go up 15%, which will immediately make Russia first in Europe. Money translates into children – I see this in different countries, not only in Russia,” he says. The question is the amount and nature of the payments: it should be a large one-time payment meant for investment, for example, in housing. “There must be a pronatalist population policy,” adds Raksha.
“Such measures can only shift the timing of births. If a woman plans to have a second child in five years, then certain payments can move that birth up,” Gimpelson argues. Yet if the timing of births moves up but the number of children born remains the same, then the decline in fertility will simply come later and be stronger. “I do not know of any compelling historical examples of financial incentives actually increasing fertility rather than just shifting the timing of births,” he says. Unfortunately, Gimpelson notes, government officials have a very simple view of women: they should have children, and they will do that more if they are paid.
Kids as commodities?
Children are not commodities in the economic sense, argues demographer Sergei Zakharov from the Institute for Demographic Research at the University of Strasbourg – their cost cannot be determined through the market, while their «use value» is dubious. According to Zakharov, even the usefulness of children in peasant families in the past is a myth. Nevertheless, he says, still widespread are consumer, or more precisely, instrumental attitudes toward children and, accordingly, ideas about stimulating birth through economic measures.
Economists like to refer to Nobel laureate Gary Becker, who thought that reducing direct and indirect costs to families would increase fertility and applied the concept of “economic rationality” to family decisions about having children.
According to Raksha, demographic measures have a much bigger impact on the birth rate than social measures: for example, maternity capital turned out much more effective than benefits. “Benefits are needed to reduce poverty, but maternity capital is needed to raise the birth rate. But since maternal capital is now only paid for the first child, its effectiveness suffers. Because the birth rate of first children does not depend on demographic measures: almost everyone who wants children in principle has a first child; the only thing is that the birth date might be moved up. For second [children], incentives are already needed,” he says.
As for poverty, expanding benefits for children can reduce it to some extent, agrees Gimpelson, but there is a problem: “still, families with small children are generally young spouses. What is the reason for their poverty – the presence of children, lack of work experience or low pay? We must first establish the actual cause, maybe then the ‘treatment’ can be made more effective.”
There is a simple way to increase the birth rate, Raksha claims. “Two million rubles of maternity capital for the second and third child. The birth rate will go up 15%, which will immediately make Russia first in Europe. Money translates into children – I see this in different countries, not only in Russia,” he says. The question is the amount and nature of the payments: it should be a large one-time payment meant for investment, for example, in housing. “There must be a pronatalist population policy,” adds Raksha.
“Such measures can only shift the timing of births. If a woman plans to have a second child in five years, then certain payments can move that birth up,” Gimpelson argues. Yet if the timing of births moves up but the number of children born remains the same, then the decline in fertility will simply come later and be stronger. “I do not know of any compelling historical examples of financial incentives actually increasing fertility rather than just shifting the timing of births,” he says. Unfortunately, Gimpelson notes, government officials have a very simple view of women: they should have children, and they will do that more if they are paid.
Kids as commodities?
Children are not commodities in the economic sense, argues demographer Sergei Zakharov from the Institute for Demographic Research at the University of Strasbourg – their cost cannot be determined through the market, while their «use value» is dubious. According to Zakharov, even the usefulness of children in peasant families in the past is a myth. Nevertheless, he says, still widespread are consumer, or more precisely, instrumental attitudes toward children and, accordingly, ideas about stimulating birth through economic measures.
Economists like to refer to Nobel laureate Gary Becker, who thought that reducing direct and indirect costs to families would increase fertility and applied the concept of “economic rationality” to family decisions about having children.
“However, modern theories say that the matter is not only about economic costs: both uncertainty about the future and gender inequality in the family – when a woman is forced to be torn between work and children – drag on fertility.”
In the 1980s, says Sergei Zakharov, ideas about gender equality appeared, and population policy became seen as tool to promote the involvement of men in raising children.
Such population policy is best observed in France and the Scandinavian countries: there, men, just like women, get leave to care for children and are responsible for their upbringing. “Australian demographer and sociologist Peter McDonald argues that women’s 20th-century achievement of equal rights in social spheres has now run up against the fact that the distribution of roles in the family remains patriarchal, with unfair time budgets for men and women. So, for example, not only kindergartens are needed so that a woman can work – men should work in these kindergartens and take their children there too,” explains Zakharov.
But have pronatalist measures, so entrenched in France and Scandinavia, yielded results? Do these countries lead Europe in terms of fertility? The birth rate in France and the Scandinavian countries is indeed higher, and until recently it had been close to two children per woman, Zakharov points out, before dipping again.
Meanwhile, demographers have noted another problem: in countries that once had strong pronatalist policies, the birth rate is low. “The lowest birth rates in Europe are in Spain, Italy, Germany and German-speaking communities in other countries. Because in the 30-40s of the last century, it was Franco, Mussolini and Hitler who pursued pronatalist policies. Mussolini is in fact the father of the population policy that is now being imposed in Russia: with the ‘carrot’ in the form of benefits for large families and the ‘stick’ for the childless in the form of a ban on abortion, taxes, tabooing family planning, etc. Dictators really love these measures, which they think will give them new soldiers,” says Zakharov.
Such population policy is best observed in France and the Scandinavian countries: there, men, just like women, get leave to care for children and are responsible for their upbringing. “Australian demographer and sociologist Peter McDonald argues that women’s 20th-century achievement of equal rights in social spheres has now run up against the fact that the distribution of roles in the family remains patriarchal, with unfair time budgets for men and women. So, for example, not only kindergartens are needed so that a woman can work – men should work in these kindergartens and take their children there too,” explains Zakharov.
But have pronatalist measures, so entrenched in France and Scandinavia, yielded results? Do these countries lead Europe in terms of fertility? The birth rate in France and the Scandinavian countries is indeed higher, and until recently it had been close to two children per woman, Zakharov points out, before dipping again.
Meanwhile, demographers have noted another problem: in countries that once had strong pronatalist policies, the birth rate is low. “The lowest birth rates in Europe are in Spain, Italy, Germany and German-speaking communities in other countries. Because in the 30-40s of the last century, it was Franco, Mussolini and Hitler who pursued pronatalist policies. Mussolini is in fact the father of the population policy that is now being imposed in Russia: with the ‘carrot’ in the form of benefits for large families and the ‘stick’ for the childless in the form of a ban on abortion, taxes, tabooing family planning, etc. Dictators really love these measures, which they think will give them new soldiers,” says Zakharov.
“Generations that grew up with a consumer attitude toward women as ‘suppliers of human resources’ have fewer children than those that grew up in an atmosphere of increasing prosperity, respect by the state for citizens’ private lives and the involvement of women in public life.”
The Russian leadership is now trying to carry out a revival of the practices of the Mussolini era, says Sergei Zakharov. Not only do these pronatalist measures reduce the gap between the births of planned children, but every time in Russia they have been put in place at the wrong time: when a previous large generation reached childbearing age.
As a result, this large generation gives birth to children in a shorter period of time for the sake of payments – given the uncertainty of life in Russia, you take what you can get! Meanwhile, the small generation that follows cannot produce the same number of children – for that to happen, each woman of that generation has to have more children. Yet the prospect of receiving a payment does not encourage women to have more children – it encourages them to have children earlier.
“Families received the first maternity capital in 2007 – at the very peak of a demographic wave. Now, we have what we have – a natural decline in the birth rate,” says Zakharov. In his view, Russia’s current population policy will lead to another “demographic hole.” In addition, he echoes Raksha that some of the men fighting today will be killed and others will return home with physical and psychological problems, which obviously does not bode well for their chances to become good husbands and fathers. “Russia’s current population policy, in terms of its expected results, is working completely counter to other actions of the authorities,” Zakharov concludes.
Meanwhile, he notes a new trend that is being observed in developed countries: whereas before the 70s high female employment led to low birth rates, starting from the mid-70s the opposite trend has been gaining steam: in societies and social groups where women work more, the birth rate is higher. “The new social ideology says that the goal of family policy is to provide the best opportunities for the well-being and development of all family members,” says Zakharov. Still, he admits that the ideal is nowhere to be found yet.
As a result, this large generation gives birth to children in a shorter period of time for the sake of payments – given the uncertainty of life in Russia, you take what you can get! Meanwhile, the small generation that follows cannot produce the same number of children – for that to happen, each woman of that generation has to have more children. Yet the prospect of receiving a payment does not encourage women to have more children – it encourages them to have children earlier.
“Families received the first maternity capital in 2007 – at the very peak of a demographic wave. Now, we have what we have – a natural decline in the birth rate,” says Zakharov. In his view, Russia’s current population policy will lead to another “demographic hole.” In addition, he echoes Raksha that some of the men fighting today will be killed and others will return home with physical and psychological problems, which obviously does not bode well for their chances to become good husbands and fathers. “Russia’s current population policy, in terms of its expected results, is working completely counter to other actions of the authorities,” Zakharov concludes.
Meanwhile, he notes a new trend that is being observed in developed countries: whereas before the 70s high female employment led to low birth rates, starting from the mid-70s the opposite trend has been gaining steam: in societies and social groups where women work more, the birth rate is higher. “The new social ideology says that the goal of family policy is to provide the best opportunities for the well-being and development of all family members,” says Zakharov. Still, he admits that the ideal is nowhere to be found yet.
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