Making the most of Israel’s fertility edge

Yet a Bank of Israel study published in April provides grounds for concern. It found that young families, even middle-class working ones, often struggle to make ends meet, but the government gives such families very little assistance compared to other developed countries. And if this continues, rising fertility could easily reverse: Parents want to be able to provide for their children, so if they feel they can’t do so adequately, they’re likely to have fewer of them.

This isn’t mere speculation; it has been proven repeatedly. When Israel slashed child allowances for large families in 2003, for instance, birthrates fell in the two communities most likely to have large families – Muslims (dramatically) and Haredim (modestly). Conversely, countries like France and England have successfully boosted birthrates by increasing aid to families with children. 

Clearly, financial aid won’t boost birthrates unless parents want more children to begin with. But for parents who do want another child, making it more affordable increases the chances of their having one. That’s precisely why in Israel, unlike most other countries, “upward socioeconomic mobility has been linked to a relatively higher number of children,” as one study put it: Israeli Jews generally say they want three to four children, so when they feel they can afford it, that’s what they have. And that holds even for secular Jews: Some years ago, for instance, a colleague from upscale north Tel Aviv told me that having a fourth child was the new “in thing” in her neighborhood. 

Yet many Jewish families still have only one or two children. Thus the question is how to make them feel they can afford three or four.

One solution is bringing down the overall cost of living. Prices of food, housing and other necessities have soared in recent years, and that hits young families particularly hard. For instance, they are less likely to own their own home than older couples are, making them more vulnerable to rising housing prices. 

But the high cost of living is a complex problem with no easy solutions. Efforts to lower housing prices, for instance, have often backfired, and even successful policies can take years to have an impact. Thus while the government must eventually address this problem, a simpler way to boost the Jewish birthrate is to aid young families directly.

Unfortunately, most Israelis reject this idea out of hand, because both approaches tried in the past have been justly discredited. First, Israel simply paid child allowances to Jews but not Arabs – an obviously discriminatory policy that the High Court of Justice ultimately nixed. 

Next, it tried a truly bizarre tactic: paying small allowances for the first two children, somewhat more for the third and fourth and almost quadruple for the fifth child onward. Thus a family with six children would receive almost seven times as much as a family with two (NIS 1,981 versus NIS 288 per month), despite having only three times as many children. But since most Israelis didn’t want five or more children, this policy proved demographically counterproductive: It encouraged fertility mainly among Muslims and Haredim. 

At that point, the government gave up. Now, it simply pays everyone NIS 140 a month per child – a sum too small to encourage anyone to have more children.

Yet it’s possible to encourage Jewish fertility in a nondiscriminatory way simply by giving more money to all young families, thereby making it easier for them to afford another child. This could be done by increasing the per-child allowance for all children, or even just for the first one or two (a justifiable distinction, since first children require outlays on items like cribs and strollers that can be reused for subsequent children). Alternatively, as the Bank of Israel report suggested, child tax credits could be made available to either parent instead of only to mothers. Currently, this credit often goes unused, because women are more likely to work in part-time or low-wage jobs and thus not to earn enough to be liable for taxes. 

But wouldn’t higher benefits to both Jews and Arabs increase Jewish and Arab birthrates equally, thereby leaving the demographic balance unchanged? Surprisingly, probably not – because no amount of extra money will make parents have another child if they don’t actually want one. 

Israeli Jews clearly do want more children; that’s why the Jewish birthrate has increased steadily in recent years despite the soaring cost of living and meager child benefits. Thus if children became more affordable, they would probably have more. 

The question is why the Arab birthrate has fallen. If it’s because Arabs, who generally earn less than Jews, were more affected by rising prices, then bigger benefits might indeed boost their birthrate. But it’s more likely that Israeli Arabs are simply following the same pattern as the rest of the planet: As communities become more urbanized and women become more educated, they start wanting fewer children, so birthrates drop. And in this case, extra money has limited impact: In Britain and France, for instance, fertility rates remain below replacement level (2.1 children per women) despite the increase sparked by higher child benefits.

The fact that well-educated, urbanized Israeli Jews want larger families is a global anomaly: Birthrates have been plummeting throughout the West, the Far East and the Muslim world, often to below replacement level, confronting these countries with the problem of how shrinking work forces can support a growing elderly population. Thus Israel’s fertility is not only a demographic boon, but an enormous economic advantage. And we ought to be exploiting it to the fullest by making sure Israelis can afford the families they want, rather than forfeiting our demographic edge by starving young families of support.