The importance of children and families in welfare states

Abstract

Familialism is increasingly becoming counter-productive because women have redefined their life course and children have become rare. Policies should be redefined as people that most need services are often those that least can afford these. Failure to support families may affect both the quantity and quality of children. If motherhood remains incompatible with work, fertility will suffer. If investments in children remain inadequate, Europe can definitely say goodbye to its dream of becoming the World's most competitive knowledge economy. A new social contract is called for that ideally should have an optimal policy mix ensuring both the socially desired level of fertility and investments in children. The really important cost of children lies in the child penalty of motherhood in terms of lost potential lifetime income. If affordable child care is unavailable families must choose between one of two evils: either forego children in the interest of the woman's career, or sacrifice the mother's career in the interest of family formation. A more egalitarian division of paid and unpaid work may emerge as a bottom-line condition for future fertility. The evolving knowledge economy places ever stronger demands on human capital, making child quality of increasing importance. This is why child investments produce an increase in their lifetime net social value. Obviously universal and affordable quality childcare does not come cheap. The Danish model is arguably optimal: In an environment of full-time employment the costs to government for providing childcare are substantial investments but the lifetime wage gains from no work interruptions are enormous. The net return to the exchequer yields a respectable return on the initial investment. Such a return is obviously much more difficult to obtain if women are primarily part-time workers. We should, however, expect a gradual shift from part-time to full-time job preferences. © 2011 Springer Science+Business Media B.V.