A 2023 study (Taxing reproduction: the full transfer cost of rearing children in Europe by Pieter Vanhuysse, Márton Medgyesi, and Róbert Iván Gál) measures the intergenerational transfer contributions by parents relative to non-parents in Europe. It goes beyond public transfers to factor in two less visible types of transfers in the family realm: market goods and services (money) and unpaid household labor (time).
The authors argue that better accounting for these less visible transfers matters greatly, as what is imperfectly measured tends to be undervalued. This has major implications for understanding the transfer contributions of parents in reproducing society. They situate the study within the demographic transition theory, viewing it as a change in the flow of wealth.
Key Findings
Parents contribute almost exclusively to public transfers but provide larger private transfers: mothers mainly time, and fathers mainly market goods.
Estimating transfer stocks over the working life, Europe's average parental/non-parental contribution ratio flips from 0.73 (public transfers alone) to 2.66 (all three transfers combined).
The highest combined parental/non-parental contribution ratios are in Sweden and Finland.
The metaphorical tax rates implicitly imposed on rearing children in Europe are multiples of the value-added tax rates on consumption goods.
Data and Methods
The study uses cross-sectional data from 12 European countries around 2010, covering all main types of welfare regimes. It adopts and extends the National Transfer Accounts (NTA) methodology to split age-based accounts by childrearing status.
Public transfers are distributed by age using household survey data and adjusted to national accounts. Familial money transfers (market goods and services) within households are modeled based on assumptions about sharing rules. Time transfers (unpaid household labor) are estimated using time-use surveys and imputed into the EU-SILC dataset.
The authors construct cross-sectional age profiles of transfers split between parents and non-parents and conduct a flows-to-stock exercise to assess synthetic working life-courses regarding net transfer payments.
Discussion
The study finds significant asymmetries in the statistical visibility of transfers, with nearly all non-parental transfers being visible compared to just over one-quarter of parental transfers. This invisibility allows welfare states to implicitly free-ride on the cost of producing their own future tax base.
The authors discuss a seeming "Nordic paradox": despite their family-friendly policies, these welfare states do not diminish the implicit tax on childrearing. They posit that such policies help parents work but do not necessarily reduce their overall transfer contributions due to the logic of "transfer conversion."
The paper also examines gender differences, finding that what sharply distinguishes fathers and mothers is not their overall familial transfer contributions but their composition: fathers mainly contribute to market goods and services, and mothers mainly do unpaid household labor.
Implications
The authors argue that unveiling the magnitude of these invisible transfer asymmetries carries multiple implications for policy debates. It raises the question of whether aging European societies unwittingly tax, rather than subsidize, their own reproduction.
They contend that better measurement of the distributional impact of the status quo allows democratic debates about social reproduction and the costs of childrearing to be held on more complete and explicit terms. The findings also point to asymmetries in how societies reward different forms of saving for late life, with the returns to private financial assets being privatized. At the same time, those with parental investments in children are largely socialized.
The authors conclude that the full cost of reproducing society in contemporary Europe seems unequally distributed and rather high, amounting to a "double whammy" for those who rear children.