Evaluating the impact of Taiwan’s fertility policy

Written by Wen Shan Yang.

In 2010 Taiwan’s total fertility rate (TFR, the number of children who would be born per woman during her life time using an estimation based on the current year) of 0.89 was so low that it became a member of a dubious club: the lowest-low fertility countries in the world club. According to this estimate, a woman in Taiwan will have borne less than one child after passing her child-bearing age of 49. In his 2011 New Year’s Day Address, then President Ma Ying-jeou declared the 0.89 TFR to be a national crisis. He proclaimed that the government will tackle the low TFR and encourage Taiwanese women to bear more children, and over the following year introduced policies such as children-rearing subsidies and daycare.

According to official data provided by the Ministry of Interior, Taiwan’s TFR has been below the replacement level of 2.1 since 1984. Although many prominent demographers had warned of an imminent population crisis of labor shortages and aging, society in general did not pay much attention. One reason for this lack of interest is the high population density in Taiwan – the majority of its 22 million population live along the west of the island. Mass media and some scholars argued that low fertility will help to alleviate the population density of the crowded cities and reduce carbon emissions.

In Taiwan, fertility behaviors are heavily related to marriage. Most children are born in wedlock in Taiwan due to the culture and a comprehensive household registration system, which records the parents’ names after the child is born. Only 4% of births in Taiwan do not register the father’s name, suggesting very few children are born out of wedlock. To put this into an international perspective, almost 56% of births in France are not from a formal marriage. Though pre-marital sex is no longer taboo and cohabitation is common among young people, most will marry once the partner is pregnant. We estimate almost 46% of births happened within eight months of marriage. Hence, a lower interest in marriage may affect the fertility rate. According to a popular book published in 2012, Bomb-Generation: Consortium of Companies, Pauperization, and the Crisis of Lowest-low Fertility〈崩世代：財團化、貧窮化與少子女化的危機〉, because of the lack of economic prospects and employment opportunities for the younger cohorts, many are unwilling to tie the knot and therefore do not bear children.

Fertility Policy after 2010

Dr. James C.T. Hsueh, a National Taiwan University sociology professor, was appointed Minister Without Portfolio in charge of population and social welfare policies when President Ma Ying-jeou started to provide fertility incentives. Dr. Hsueh advised President Ma to set up three policy pillars to improve fertility – encouraging young people to get married, encouraging young people to give birth, and helping young people to raise children. The first policy pillar was a success in 2011; a total of 138,819 couples tied the knot, an increase from 117,000 couples in 2009. However, the number of married couples leveled off after a short rally and dropped to less than 150,000 after 2015. Correspondingly, the number of births increased from 166,886 (2011) to 229,481 (2012), resulting in approximately 63,000 more babies. Since the marriage rate leveled off in 2012, the birth rate has fluctuated from 1.10 (2013) to 1.17 (2017).

The third pillar of the fertility policy, helping young people have the ability to raise children, includes measures such as a six-month maternity leave policy with 60% of the paycheck for both parents, a tax break for families rearing children aged 5 and under, and subsidies for nursing and childcare. In May 2016, when the Democratic Progressive party won the presidential election, new President Tsai Ing-wen also emphasized the lowest-low fertility crisis and continued policies to help young people raise children.

How Fertility Policies Work

Among the three pillars of fertility policy, helping young people to raise children has been promoted most consistently. This line of policies includes a cash bonus for the new baby, a maternity leave pension, childcare allowance, daycare subsidy, and privately managed public infant care centers. Total policy expenditure is estimated to cost around 7.2 billion NT dollars per year (approximately GBP 177 million). Most of the expenditure comes from the Ministry of Labor as maternity leave for parents.

Another important policy is the one-time maternity bonus. This was first implemented in Jinmen in 1997, an offshore island from China’s Fujian province, because of the extra revenue generated from the famous Jinmen sorghum liquor. Some local governments adopted this maternity bonus measure over the next two decades, and local governments have their own policy measure according to local demographic structures and financial conditions. For example, Hsinchu City launched the maternity bonus policy in 1999 and the bonus increases by parity: it is NTD 15,000 (GBP 370) for the first-born child, NTD 20,000 (GBP 490) for the second-born child, and NTD 25,000 (GBP 610) for the third child and subsequent children.

Local governments also provide an allowance for children aged up to 5 in a bid to boost birth rates. Generally, parents can receive a monthly payment of NTD 2–3,000 (GBP 50–75) for each children aged 4 and under, and some more resourceful local governments provide an additional amount for the third child. Daycare costs place a huge burden on parents in Taiwan. More than 90% of infant daycare centers are privately owned, and charge around NTD 15–20,000 (GBP 370–490) depending on the locality, roughly 65% to 87% of the minimum monthly salary (NTD 23,100 (GBP 570) as in 2019). As the small amount of subsidy provided by local governments is not enough to support daycare costs, the measure of increasing public daycare facilities to meet the demand had become the top priority for some local governments.

With the changing social and demographic structure of Taiwan, the number of small families with dual-income couples has increased tremendously in the past several decades in Taiwan. These families typically do not have the traditionally available support from their parents (i.e. the grandparents) to take care of their children, thus childcare is now in great demand. Compared with other localities, Taipei has the best policies to boost birth because of its tax revenue and financial surplus. The Taipei City government proposed a so-called “Have a Care-free Pregnancy Program” to integrate and coordinate resources among different branches to promote a pro-natal policy initiative. In general, the Taipei City government is the only municipality to have a special task force in the Civil Affairs Bureau in charge of pro-natal policy. It began the maternity bonus in 2011, whereby parents can receive NTD 20,000 (GBP 490) for every newborn baby. Parents there can receive a monthly childcare allowance of NTD 2,500 (GBP 61) for each child aged 5 and under. Because Taipei City has the most consistent pro-natal policy among all municipalities, here we will evaluate its policy effectiveness.

Effectiveness of Fertility Policy Intervention in Taiwan

Since 2011, the Taiwanese government has allocated an annual budget around NTD 10 billion (GBP 250 thousand) to boost fertility. However, the total fertility rate oscillated around 1.10 to 1.20, less than the 1.3 lowest-low fertility level, and much less than the desired replacement level of 2.1. The effectiveness of these pro-natal policies should be a major concern for policy-makers. Unfortunately, there have been few academic studies on the effectiveness of pro-natal policy interventions. Only one recent publication provides very limited comments on the policy interventions because of a scarcity of records. In the present study, I present unpublished research results on the effectiveness of pro-natal policy in Taipei and other areas of Taiwan. I utilize a propensity scored-based weighting model, as proposed by Linden and Adam (2011), to study the trajectories of policy interventions on fertility before and after the pro-natal policy.

The total fertility level has increased from a low of 900 (2010) to around 1,300 (2012), and it leveled off in 2013 before then increasing again (Figure 2). Compared to other areas of Taiwan, except for the offshore islands of Jinmen and Lianjiang counties, the other fertility areas are all lower than Taipei and leveled off after 2016. One alarming sign from the very simple analysis is that the total fertility rate of Taiwan is still dropping after the pro-natal policy initiative from 2011. Because most young Taiwanese will bear only one child and are not willing to give birth to any more, I expect that the long-term fertility trend will continue to decline. As I mentioned earlier most parents in Taiwan are unwilling to have a second child because of the high cost to rear children; to boost fertility the government needs to start a more comprehensive pro-natal policy, including increasing infant and child day-care facilities, and introduce generous maternity leave measures, such as a more generous four-day working schedule for mothers.

Wen-shan Yang is a research fellow at the Institute of Sociology and the Director of the Program for Historical Demography, Academia Sinica, Taipei, Taiwan. Image credit: CC by Uffizi Chu/Flickr.