Young children play at their home in Oshawa, Ont. Canada’s fertility rate reached a record low of 1.25 children per woman in 2024.J0HAN HALLBERG-CAMPBELL/The Globe and Mail
Countries around the world are seeing birth rates drop – and they’re trying to spend their way out of it.
In Canada, the fertility rate hit an all-time low of 1.25 children per woman in 2024. Meanwhile, the average age of a mother at first childbirth has risen to 31.8 from 26.7 in 1976.
The Canada Child Benefit, a federal government monthly tax-free payment, is meant to help eligible families cover the costs of raising children under 18. On top of that, the idea of a “baby bonus,” a one-time payment made right when a baby is born, surfaces every few years.
But would a baby bonus change a woman’s decision to have a child, once you weigh the cost of motherhood in Canada against the size of the cheque?
Let’s look at the countries that have gone furthest. South Korea, as of 2024, pays women two million won at birth (roughly $2,000), and monthly transfers of 100,000 won (just over $100) for eight years. In addition, the government offers tax deductions, parental leave top-ups and housing loans for families with two or more children – adding up to approximately 29.6 million won ($30,846) in support per child across eight years.
It’s arguably one of the most robust support programs out there. Despite that, the fertility rate in South Korea is still one of the lowest in the world.
Hungary has zero-interest loans, debt forgiveness, housing support and income-tax relief for mothers as some of the country’s measures to increase the fertility rate. Singapore implemented a baby bonus in 2001, and the United States is currently toying with offering US$5,000 per child to families. Yet fertility rates in countries where these policies have been enacted are still remarkably low.
What the research consistently finds is that these types of payments change the timing people have children, not how many they have. So, a couple who was planning to have two kids would have them a year or two earlier – but they don’t have a third.
Analysis: Why falling birth rates may pose a problem for future retirees
Canada has run this experiment. In 1988, Quebec introduced an Allowance for Newborn Children, paying bonuses that reached $8,000 for a third or subsequent child. UBC economist Kevin Milligan studied it and found a measurable increase in births.
But the bonuses worked under specific circumstances. The payments were large relative to incomes, and they were part of a broader push to encourage francophone births. Even in Quebec, the effect faded as the bonuses became the norm.
That’s because the cost of motherhood is far bigger and more challenging to quantify than any dollar value on a cheque. Time out of the work force perpetuates the wage gap through lost earnings, forgone promotions, lost wage growth, and pension contributions and benefits.
This loss is called the “motherhood penalty,” and by some measures, it’s estimated to cost women half a million dollars over a 30-year career. No one-time payment can address it.
New research by Nobel Prize-winning, Cambridge-based laureate Claudia Goldin argues that the falling fertility rate across the developed world is largely because of a mismatch: Women have gained autonomy faster than men have adapted. Financially, women benefit more from breaking traditional household arrangements, and men benefit from keeping them, causing some career-oriented women to delay or ultimately forgo having children altogether.
The friction that Dr. Goldin speaks about is the absence of a credible way for men – and governments – to guarantee that a woman won’t bear the full cost of parenthood. Baby bonuses can’t actually lift the birth rate because they are targeting the wrong thing.
Her data shows the wider a country’s gender gap in unpaid-care-hours is, the lower its birth rate. In Japan, where women do about 3.1 more hours of unpaid household and care work a day than men, the fertility rate is 1.36. In Sweden, where the gap is under an hour, it’s 1.7. Women have become more educated and more invested in their careers while still carrying the household, and where that imbalance is sharpest, they have the fewest children.
This is the number that the baby bonus never reaches. A cheque arrives once; the second shift arrives every day for eighteen years. Until the cost of motherhood is shared, between partners, employers and the government, no amount of money at the hospital door will move the birth rate.
Janine Rogan, CPA, is a bestselling author and founder of The Wealth Building Academy.