Shopping for parental benefits around the world

0:00Support comes from our 2025 lead sponsor of Planet Money, Amazon Ads. Less than half of customers fully trust their financial institutions. Amazon Ads helps financial brands build that trust through relevant ads using first-party signals to reach the right customers. More at advertising.amazon.com. This is Planet Money from NPR. I have to start this episode off with some personal news. 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.

0:47Our 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.

1:26And 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. 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.

2:06The 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.

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3:06Earn unlimited double miles, a$300 annual Capital One travel credit, and access to airport lounges. Capital One. What's in your wallet? Terms apply. Details at CapitalOne.com. This message comes from Insperity. Excellence takes drive, work, perseverance. Tiger Woods brings it to the course. Insperity brings it to your business. Want to be the best? Work with the best. Insperity. How you HR matters. Learn more at insperity.com slash tiger. 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.

3:51I'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.

4:27Because 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, 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.

5:10I've heard that elsewhere, other governments provide childcare 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 childcare. 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.

5:46as 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.

6:25He 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 won'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.

7:01Stop 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.

7:49People 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.

8:28And 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 pronatalist policies. Better parental leave, tax benefits, cash payments at birth. Maybe people get money for having babies, they will have babies.

9:10But 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.

9:55That 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 will 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.

10:40Immigration. 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.

11:18Really? 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 Nikolaus Lofgren at the Swedish Social Insurance Agency. Oh, I've been working with these issues for at least 20 years now.

11:56So 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.

12:44But 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 need 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.

13:25At 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, 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?

14:03Great question again, women. And 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.

14:42So 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 papamonader, 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 the pay gap is about 7 % or something like that.

15:27Seven 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. 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.

16:08If 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 Niklas says Sweden feels pretty satisfied about its two goals of more women in the workforce and more babies.

16:52This 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, from day one. I could just move right now. Yes, you will get it from day one. But the insurances, like parental insurance, 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.

17:36But 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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19:21This message comes from Grammarly. From emails to reports and project proposals, it's hard to meet the demands of today's competing priorities without some help. Grammarly is the essential AI communication assistant that boosts your productivity at work so you can get more of what you need done faster. Just a few clicks can tailor your tone and writing so you come across exactly as you intend. Get time back to focus on your high-impact work. Download Grammarly for free at grammarly.com slash podcast. That's grammarly.com slash podcast. 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.

20:05South 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.

20:50I 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.

21:36Hard 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.

22:18You 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 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.

23:02There'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. You know, 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.

23:42I 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 Russia, basically, like a little bit more than 30 years ago.

24:26And 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 come work, especially in the tech sector, and pay taxes. But the explicit motivation behind these pronatalist 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.

25:14But, 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 Kader 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.

25:56This 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 it 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.

26:37So 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.