The Economics Behind Asia’s “Dual Income, No Kids” Phenomenon.

China announced plans to do away with its 35-year-old “one-child policy,” which has banned most couples from having more than one child. Since its conception, the unpopular policy has given rise to many social and economic consequences that will continue to have far-reaching effects in the future. The more prominent economic problems it has caused include a rapidly aging population and shrinking pool of workers.

 

But how much will this reverse in policy change the size and makeup of China’s population? Experts predict that it will not change much. The factors that influence China’s family run deeper beyond the one-child policy.

 

The primary reason is that, for many couples, raising children in China has become very costly. To prepare a child for the country’s ultra-competitive schools and workforce, parents must invest plenty of time and money in a child — for schooling, extracurricular activities, and private tutors.

 

A survey conducted by the Shanghai Academy of Social Sciences in 2011 showed that families paid on average about 32,000 yuan (S$7,000) per year to raise one child. In 2010, the average disposable income in Shanghai was only 31,838 yuan. Around 35% of parents in Shanghai felt that raising a child was a heavy burden, and 45.3% said they wouldn’t have a second child, even if policy allowed. 40 percent of Chinese households now consist of one or two people.

 

Furthermore, the hefty cost for housing, especially in China’s major cities, can consume money that Chinese families could otherwise spend on children. Most Chinese of child-bearing age are single kids, and they may forgo children in order to better their economic situation and support their aging parents.

 

The situation in Singapore closely mirrors that of China. A “stop at two” child policy was once implemented in the 80s, and though it was eventually rescinded, the decline in the birth rate has followed a fairly predictable path already charted by many other developed countries like Japan and South Korea.

 

In Singapore, there are no unemployment benefits or minimum wage policies. Having been ranked as the most expensive city in the world, housing and living costs are astronomically high. The stressful schooling system has created a tuition industry worth S$1.1 billion in 2014. Thus, for the average Singaporean, raising even one child means committing a sizable chunk of income for at least 20 years. Couples with uncertain economic prospects and poor job security in the near future would naturally refrain from having children as well.

 

From China’s situation, we can predict that Singapore’s band-aid solutions (e.g. increased childcare subsidies) will do little to alleviate its population problems. They do not resolve the underlying economic issue – raising children is essentially a sizable, long-term investment that most couples are not willing and/or able to commit their limited finances to.

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