March 2, 2023

Are financial incentives given by the government effective in boosting birth rates in Singapore? This is the central question in Dr Kelvin Seah’s (NUS Economics and Institute of Labour Economics (IZA)) piece, ‘Commentary: Parenthood Incentives – Singapore Cannot Keep Doing More of the Same Without Knowing Whether These Really Work’ (Channel NewsAsia, February 2023). This commentary comes against the backdrop of government plans to expand its financial incentives for couples choosing to have children, newly announced in the 2023 Budget.

Dr Seah points out that government incentives for couples to have children are made with the express goal of boosting the country’s fertility rate. The effectiveness of these policies should therefore be judged with that metric. He notes that fertility rates have continually declined to historical lows of 1.10 in 2020 despite the introduction of the marriage and parenthood package in 2001.

Nonetheless, he argues that the policies would still have been effective if they had cushioned the fall in fertility rate. In other words, the policies would have been effective if they were successful in encouraging some couples to have children when they might not have done so without these incentives.

While studies on similar incentives abroad indicate that they do work to promote fertility rates, there is currently no data on the effects of these policies in Singapore. To this end, Dr Seah proposes randomised controlled experiments to be conducted, where fertility outcomes between couples given incentives are compared to those who are not, to determine the effectiveness of these policies in the Singapore context.

This is important because such incentives present costs to Singapore society, including tax burdens on taxpayers or productivity losses on employers corresponding to time off granted for parental leave. Dr Seah argues that the benefits which parenthood incentive policies bring should outweigh their costs if they are to be meaningful.

Read the Channel NewsAsia commentary here: https://www.channelnewsasia.com/commentary/singapore-budget-2023-baby-bonus-fertility-rate-effective-more-children-3298296