Universal Preschool as Old-Age Support

Can state-funded preschools boost the birth rate? That question is not central in most debates about universal preschool. In the United States, equity is a key issue: President Obama advocates universal preschool to “make sure none of our children start the race of life already behind.” In Australia, state-funded preschool is advocated as a means of keeping the nation economically competitive because children who attend preschool become more productive adults. The French stress learning citizenship and learning to consume culture when explaining why all French three-year-olds go to preschool.

But what difference does state funding of preschool make for families? Recent evidence from Belgium suggests that it can help families manage to have more children. This should not be confused with having many children: the average woman in Belgium has 1.9 children in her lifetime, the same as in the United States. While that’s slightly below the replacement rate of 2.1 children per woman, it is almost 20% higher than in neighboring Germany where the average woman bears 1.6 children. That difference is enough to care about: smaller younger generations today mean fewer workers two to three decades down the road, and—more importantly—a huge elderly dependency ratio as retirement cohorts are larger than their successors still in the workforce.

Generally, the furthest west countries in Europe as well as Nordic countries have higher fertility rates than Germany and the countries to its south and east (though Spain and Portugal also have low fertility). So why do places like France and Belgium have fertility high enough to make supporting the elderly easier? Family-friendly policies like state-funded preschool and other benefits and transfers could explain the differences, but cultural factors ranging from gender attitudes to childrearing ideologies could also shape state policy. In other words, we can’t conclude from welfare states’ higher fertility rates that their policies help because cultural factors might cause both higher fertility and supportive policies.

Free preschool helps keep fertility higher in German-speaking Belgium than in Germany.

The authors of “Family Policies and the Western European Fertility Divide: Insights from a Natural Experiment in Belgium” devised a way to separate the effects of policy and culture: they analyzed fertility in German-speaking Belgium. Most of Belgium is French or Flemish, but the territory of Eupen-Malmedy was German until Germany was forced to cede it after World War I. It remains culturally German in many ways, and 20% of adults living there even work in Germany. But because it is politically Belgian, it provides the test case: What does fertility look like with German cultural influences and Belgian family policies? The answer is that it looks more like Belgium: free preschool helps keep fertility higher in German-speaking Belgium than in Germany.

The article discusses family policy more generally, but I focus on free preschool because their comparison of Germany and Belgium’s policies reveals that many benefits to parents are the same in both countries: preschool is the key institutional difference. How does it matter? It reduces the number of years that families must either reduce paid employment or pay for childcare. That makes a big difference for having one child versus two. The opportunity costs of course matter for each child, but extending the disruption of a career another three years to have an additional child isn’t as big a deal as extending it for another five.

The evidence from Belgium suggests what we would intuitively expect: family-friendly policies encourage families to procreate. When state-funded preschool supports childbearing, the future labor force is both larger and smarter. Plus the evidence indicates that the “additional” births come disproportionately from women with the most education, the ones who give up the most income when they devote less to paid work. Staying close to replacement fertility may require policy that encourages fertility among the most educated. Belgium also has tax concessions for early childcare that disproportionately benefit higher-income families.

Are there lessons here for the United States? It would be disingenuous to argue that we need universally available state-funded preschools in order to have a fertility rate as high as Belgium’s when we already have the same fertility without them. Plus in the U.S., even non-working mothers enroll their children in preschool at high rates, so it might not be a very efficient means of supporting higher fertility.

I would nonetheless argue there is a lesson here: institutional supports for combining work and family may be required to enable those who have the most to gain by forgoing childbearing—the educated, who are paid more for the time they devote to the workforce and who have lower-than-average fertility rates—to instead combine work and family. While this argument probably sounds sensible given the results of the Belgian study, it is nonetheless odd because it amounts to saying that we might do well to fund universal preschool because of its effects on those who can best afford to pay for preschool themselves. I can’t imagine such an argument having any political traction. But if universal preschool is pursued for its other possible benefits—increasing kids’ future earnings, keeping our nation economically competitive, and helping produce good citizens with an appreciation of culture—we might also gain from the way it supports fertility.