Continuing my discussion of the recent upsurge in pro-natalism, I want to talk about the idea that, unless birth rates rise, society will face a big problem caring for old people. In this post, I’m going to focus on aged care in the narrow sense, rather than issues like retirement income, which depend crucially on social policy.

Looking at Australian data on location of death, I found that around 30 per cent of people die in aged care, and that the mean time spent in aged care is around three years, implying an average of one year per person. Staffing requirements in Australia amount to aroundone full-time staff member per residents. So the “average” Australian requires about one full-time working year of aged care in their lifetime, or about 2.5 per cent of a working life. This is, as it happens, about the proportion of the Australian workforce currently engaged in aged care.

But what if each generation were only half the size of the preceding one? In that case, the share of the labour force required for aged care would double, to around 5 per cent.

If you find this scary, you might want to consider that children aged 0-5 require more care than old people, and for a much longer time. Because this care is provided within the family, and without any monetary return, it doesn’t appear in national accounts. But a pro-natalist policy requires that people have more children than they choose to at present. To the extent that this is achieved by subsidising the associated labour costs (for example, through publicly funded childcare), it will rapidly offset the eventual benefit in having more workers available to provide aged care.

And that’s only preschool children. There’s a significant childcare element in school education, as we saw when schools closed at the beginning of the pandemic. And school-age children still require plenty of parental care. (I’ll talk about education more generally in a later post, I hope).

Repeating myself, none of this is a problem when people choose to have children, more or less aware of the work this will involve (though, as everyone who has been through it knows, new parents are in for a big shock). But it’s clear by now that voluntary choices will produce a below-replacement birth rate. Policies aimed at changing those choices will have costs that exceed their benefits.