Cash for kids

Subsidising parenthood appears to work wonders in Japan

A patchwork of nondescript houses nestled at the foot of a mountain, Nagicho looks like an ordinary Japanese town. On closer inspection, something extraordinary marks it out: babies. Yuki Fukuda is one of many local mothers with three children. The bump under her winter coat indicates that another is on the way, part of a baby bonanza that has seen the town’s fertility rate double since 2005.

Not surprisingly, reporters have flocked to this remote corner of the country to see if there is something that promotes fecundity in the water flowing down from Mount Nagi. The cause appears to be more prosaic: economics. Alarmed by the dearth of children, the local government increased incentives to have babies. The fertility rate rose from 1.4 (meaning that the average woman will have 1.4 children in her lifetime, roughly the national rate) to 2.8 in 2014.

Mrs Fukuda will receive a “celebratory” gift of ¥300,000 ($3,530) when she gives birth. A subsidised baby-sitting service is available for just ¥1,800 a day, along with subsidised carseats and other baby accessories. When her children reach secondary school, she will receive ¥90,000 a year for each one who attends. In theory, this stipend is to cover the cost of getting children to school, especially for people who live relatively far away. And whereas usually all but the poorest and the old in Japan have to pay 30% of their health-care bills (with the national government picking up the rest), in Nagicho the local government pays the 30% for children.

Other initiatives are more creative. The town relies on a network of volunteers to help keep its two nurseries open. Businesses that move to the town receive rent-free land—a gesture that has lured at least three companies since 2014, says Yoshitaka Kumagai, a local government official. The city is also offering a clutch of refurbished or newly built apartments and houses for rent at subsidised rates.

Mr Kumagai insists all this largesse has added just 1% to the town’s ¥48bn annual budget (“spending on children” is 3% of the budget, in part because education and health care are the responsibility of the national government, for the most part). Like thousands of other shrinking communities across Japan, the town was desperate, he says: Nagicho has lost a third of its population since 1955, and a third of the 6,100 residents who remain are over 65. “We’re trying to hold the line at 6,000 people,” he says.

The town’s dilemma is replicated across the country. Deaths outstripped births by a record 300,000 in 2016; government projections say the population of 127m could plummet by a third over the next 50 years. Shinzo Abe, the prime minister, has pledged to raise the fertility rate to 1.8. To that end, much of a ¥2trn spending package approved by the Cabinet last month is slated for education and childcare.

Could Nagicho be replicated elsewhere? Hiroko Kaihara, who moved to the town years ago with her three children and works in one of the nurseries, thinks not. There’s a slowness to life that is attractive, she says, and a sense of community. “Mothers feel safe having more children; it’s not easy to create those conditions.” Mrs Fukuda says she also struggles to put her finger on why families are larger. The money helps, she admits, but that is not the main reason. Perhaps there is something in the water after all.

(The Economist)