Paying People to Have Babies Is a Good Way to Boost Population (Maybe Too Good)

Ten thousand Euros for every baby. That's the reward the Finnish town of Lestijärvi promised local parents in 2012 for every new child born.

Ten thousand Euros for every baby. That's the reward the Finnish town of Lestijärvi promised local parents in 2012 for every new child born. Now, two years on, it seems that the plan, due to last until 2016, has been working well. Too well in fact. Such has been the spike in births that Lestijärvi is now reporting a new problem: it's run out of family-sized housing.

In all of 2012, there was just one birth in Lestijärvi. In 2013, there were 14.

Before we start trying to remember the name of this baby boom metropolis in the making, a bit of context. No one is going to confuse Lestijärvi with Mexico City – it only has around 850 inhabitants. Located in central Finland, the small town is in an area where the hardly crammed together Finnish population starts thinning out for real en route to the Arctic Circle. It's no wonder that this fairly far-flung place (viewable on Google Street View) might struggle to maintain a population of young families. Given the size of the place, however, Lestijärvi’s birth spike is very impressive. In all of 2012, before the scheme was adopted, there was just one birth in the town. In 2013, there were 14. More importantly, the town is just the most generous of a large clutch of Finnish municipalities paying cash for new kids.

The practice of doling out baby cash and gifts – sometimes referred to as haikararahaksi or "stork money" – is actually a nationwide practice that all Finnish parents benefit from in some form. Around 70 municipalities pay €500 or more for each new child born, typically in areas away from the major Finnish cities whose jobs and facilities lure families without financial incentive. Lestijärvi’s closest rival in generosity offers €3,000.

Some municipalities give more token gifts instead, such as flowers, books, clocks, apple tree seedlings or – probably the lamest gift in the Finnish stork money arsenal – a city logo to stick on the baby’s bodysuit. All this comes on top of government gifts that provide most of the basic kit new parents need for their babies’ first months. Since the 1930s, the country has given out a baby box to every expecting mother, packed with clothes, diapers and other baby essentials, with the box itself doubling as a cot.

Given this generous, supportive attitude by the state, you might expect Finland’s birthrate to be booming. The reality, however, is a little more complicated. At 1.8 births per woman (according to World Bank figures) Finland is slightly below the rate needed for population replacement. While the gifts are no doubt welcome, they aren't enough in themselves to halt the population decline that would occur without immigration, leaving an aging population relying on an ever-shrinking number of younger workers.

That isn't to say that Finland’s birthrate is especially low by European standards either. The U.K., Ireland and France have higher fertility rates, as do Finland's wealthier neighbors Sweden and Norway (though at 1.9 births per woman, only just). Finland is nonetheless doing better than Germany, Italy, and Spain (1.4 births per woman each). So what role could stork money gifts like Lestijärvi’s have in all this?

The view from Finnish media is, naturally enough, that such gifts don't actually encourage people to have babies. Comparing the actual cost of raising a child to the size of any gift makes this point pretty obvious. What the money does do, however, is broadcast an image of a particular community as baby friendly, helping to attract parents from elsewhere in the country. Lestijärvi's mayor has said as much himself.

While the town's doling out of money gradually – parents get €1,000 a year for the child's first ten years rather than a lump sum – might provide a minor incentive to remain, he has said that it’s really the town’s childcare facilities and schools that are attracting people. The cash is a form of publicity campaign to acquaint families with the town's advantages. As such, it's clearly done brilliantly. As well as helping to guarantee children a secure start to life, it also means the town is more likely to end up in the long run with more adult taxpayers to help foot the bill.

Top image: Nina Buday /Shutterstock.com