Fertility: Childcare costs fuel population drought

Covid-19 baby busts – down by as much as fifth Birth rate for December 2020 – is short-lived.but a reverse Pre-pandemic trends remain half The world population fertility rate is below the replacement rate. The economic consequences are a big deal for politicians and portfolio managers.

For equity investors, an aging population presents both opportunities and risks. Growing demand for healthcare and automation should benefit companies such as Japan’s Fanuc and Germany’s Siemens. Even diaper makers like Nippon Paper, Nippon Paper and Unicharm are adapting to demographic trends. Sales of adult diapers in Japan have surpassed sales of baby diapers since 2011, Jefferies said.

Sovereign bond investors are increasingly concerned about demographic risks. A rapidly ageing population increases public spending on health care, social care and pensions, while the tax burden is spread among fewer workers. Rating agency Fitch has calculated that if there is no change in policy, the impact of aging costs on the sovereign rating could lead to a downgrade of Slovakia by 10.5 notches by 2070, the most extreme scenario.

The government does have some levers to pull, although not all factors are easy to address. Morgan Stanley said last year that concerns about climate change are affecting fertility faster than any previous trend in the field of declining fertility.

But helping parents financially is an obvious way to lower the barrier. In some countries, especially in Asia such as Japan, South Korea and China, the high cost of raising children takes up a large portion of disposable income.

Total cost of raising a child to age 18 Bae chart as a multiple of disposable income per capita, 2021 G0786_22X

Parents tend to only look at one child because sharing bedrooms and ready-to-wear clothing doesn’t cut costs much.Families with three children only cost a quarter less per child compared to families with two American government.

Countries with generous financial support appear to have more births.The Nordic country, known for its gender equality and generous welfare state, has a birth rate close to replacement level. According to the OECD, financial support for childcare, which makes it easier to combine work and parenthood, is particularly effective.

Despite the many rewards children bring, they are exhausted financially. They bring financial benefits, but the parents who bear the brunt don’t get those. Boosting the former may require more sharing of the latter.

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