Birth Rate Increases by 0.03 with 1 Million Won Incentive
Infrastructure Budget Increase of 1 Million Won Raises Rate by 0.098
South Korea's total fertility rate has dropped to 0.78, prompting the introduction of various measures to increase the birth rate. Local governments are competing to raise the birth rate by providing childbirth incentives. However, an analysis has shown that expanding regional infrastructure and services such as care centers is more effective in increasing the birth rate than these incentives.
On February 9th, visitors are examining car seats at the 'Bebe Baby Fair' held at COEX in Gangnam-gu, Seoul. The photo is not related to the specific content of the article. Photo by Yonhap News.
On the 8th, the Korea Local Tax Research Institute published a report analyzing the effects of policies from 226 basic local governments between 2009 and 2021. According to the report, providing a childbirth incentive of 1 million KRW increased the total fertility rate by only 0.03, whereas increasing the infrastructure budget per child by 1 million KRW was estimated to raise the total fertility rate by 0.098. The Local Tax Research Institute explained that this suggests that increasing the infrastructure budget could be more effective in boosting the birth rate when the same amount of budget is spent.
The institute also analyzed that childbirth incentives paid in installments have a lower effect on increasing the birth rate compared to lump-sum payments, and that it is difficult to expect a rebound in the birth rate with small childbirth incentives under 2.5 million KRW per person.
Furthermore, the report stated that infrastructure expansion policies that directly reduce childcare costs may be more effective in increasing the birth rate than cash support policies like childbirth incentives. Expanding childcare infrastructure allows individuals to benefit from local facilities and services for the duration of their residence in the area, and from the perspective of local governments, it helps build regional infrastructure.
In particular, cash support policies carry the possibility that individuals may receive cash and move away from the area at any time. There are concerns that indiscriminate cash support policies could lead to excessive competition among local governments.
Services and infrastructure policies such as care centers, children's halls, communal childcare sharing spaces, kids cafes, toy banks, and communal childcare cafes are aimed at creating an environment that supports childcare in the long term, rather than short-term cash support policies at the time of childbirth, the report pointed out.
However, in the case of basic local governments, the proportion of service and infrastructure budget in support methods was only 13.4% as of 2021, while cash accounted for 72.7%.
Jung-gu, Seoul, the Local Government with the Highest Infrastructure and Service Budget per Child
In 2021, the local governments with the highest infrastructure and service budget per child were Jung-gu, Seoul (2,114,000 KRW), Hwacheon-gun, Gangwon (831,000 KRW), and Ganghwa-gun, Incheon (768,000 KRW), in that order.
Jung-gu, Seoul allocated 670 million KRW in 2021 for the "Care for All Children" project and directly operated after-school care classrooms and out-of-school care centers.
Hwacheon-gun, Gangwon, regardless of parental income, fully supports university tuition for all students and promotes innovative educational welfare policies such as supporting high school uniforms and placing native English-speaking teachers.
Ganghwa-gun, Incheon, is expanding spaces where families can enjoy sports and leisure together by establishing a county-run kids cafe.
The report suggested that current service and infrastructure expansion policies mainly focus on preschool children, but since the biggest reason for moving to metropolitan areas during school age is education, it is necessary to expand childcare infrastructure policies centered on preschool children to school age and implement various projects.
It also expressed expectations that, similar to Germany's child allowance, long-term cash support at the national level until children reach adulthood to reduce childcare costs, combined with local governments implementing distinctive, region-specific projects, would help increase the birth rate.
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