Why don't countries pay exponentially increasing amounts of money for every new child in the family?

Question

Most fertility-encouraging policies that I've seen pay the same amount of money for the 1st/2nd/3rd/etc child. However it seems like a more efficient policy would pay exponentially larger amounts of money for every additional child, so the structure would look like:

1. First child: $1k
2. Second child: $2k
3. Third child: $4k
4. ...
5. Tenth+ child: $512k

This would push parents to have more children, as each subsequent child would be cheaper to raise than the previous one. But the vast majority of parents would not end up having 10+ children, so this should be sustainable for the state budget. Have there been any discussions of a similar proposals in countries suffering from low fertility rates?

Answer 1

The starting assumption is not necessarily true. France for example has special rules for "familles nombreuses", which kick in on the 3rd child.

Ce dernier est réservé exclusivement aux familles d’au moins 3 enfants à charge.

...reserved to families with at least 3 dependent children

I'd also add that, while the replacement rate is 2.1 it might not be optimal to have 4 childless couples and a 10 child family. Not going to be a child outcome specialist here, but that feels problematic.

For smaller families, say 2-3, this grant is almost negligible over a child's lifetime, so it doesn't incentivize the average family much.

Last, with this kind of scheme, you'd risk developing a whole class of people who have children to... get the grant. That seems like a horrible idea for the society as a whole, especially if it becomes cross-generational. From the parents' perspective however, it would be a rational response to an extremely skewed economic incentive.

This not to criticize any and all schemes to support parents. Just this particular approach has a lot of obvious holes in it.

Answer 2

germany has the Kindergeld, an allowance for the parents/legal guardians of children to help them cover the costs of raising the next generation. At times, this was partly exponential, with DM 50 for the first child, DM 100 for the second child, DM 200 for the third and subsequent children. Nowadays it is more level.

Also, child tax credits coupled with progressive income tax and other tax credits can provide a similar effect, where each additional child creates greater tax savings.

Neither Kindergeld nor tax credits come close to the true costs of raising a child, of course.

Answer 3

The math doesn't work out. We'll use the USA as a baseline; all numbers below are for that country and currency.

Take your scheme:

First child: $1k

Second child: $2k

Third child: $4k

...

Tenth+ child: $500k

The average annual salary in the US is about $95k/year. $500k is many times more than that. When you earn $500k for having a child, then both father & mother can reasonably retire and be full-time parents. Sure, having children is hard, but you are earning ~5x what you might earn otherwise - that kind of disparity is going to be hard to turn down.

The only way I can see this not working is if it is biologically impossible to have 10+ children, but a quick Google search indicates that the average woman can have ~15 children in their lifetime.

If we assume children 1-9 pay $500k in total and children 10-15 provide $500k each, then the family earns $3.5 million from having children alone. That's comparable one's possible lifetime earnings, assuming 35 years in the workforce.

So yeah: the assumption that the vast majority of parents will not have 10+ children given exponentially-increasing rewards is a flaky one. By extension, the assumption that the government budget will be sufficient to support the payout is also highly shaky.