Child care is expensive everywhere. But this country tops the list

South Korea tops the list of the most expensive places to raise a child from birth to 18, measured as a percentage of gross domestic product per capita, according to research from Jefferies (JEF) which used data from Yuwa Population Research. GDP is the broadest measure of a nation’s economic activity.

China ranks second, followed by Italy. The United States is wedged in the middle of the 14 most expensive places, between Germany and Japan.

However, in terms of the absolute amount of money spent, China is one of the cheapest places to have children. But it’s all relative: “If we then adjust that data to a percentage of median disposable income, China becomes the most expensive place to raise children,” the Jefferies researchers said.

A large part is the cost of education and the cost and availability of care when the child is young. Preschool services in China have been mostly private until recently, according to Jefferies.

Needed more than $75,000 to raise a child to age 18 in China, and another $22,000 to finish college.

While that sounds like much cheaper tuition than students in the United States might face, there’s one key difference: “In many other Western countries, a state-provided student loan is more common, and the burden is offloaded.” of the parents and is transferred to the children themselves. Jefferies analysts said.

In the United States, for example, 55% of undergraduate students graduated with debt in the 2019-2020 academic year, according to data from the College Board.

What the government can do

Lawmakers have many options to reduce the cost of having children, including subsidy child care to bridge the gap between people of different income classes.

Beijing is already stepping in to make after-school tutoring more accessible. Next on the list could be the cost of daycare and kindergarten, analysts at Jefferies think.

“We understand that the government is looking for the state to provide these services and/or regulate the price of private services,” they said.

The Chinese government announced in its current five-year plan that it aims to increase the number of nursery places for children under three years of age. old to 4.5 per 1,000 people by 2025, two and a half times the current number of 1.8 per 1,000. Right now, there are 42 million Chinese children under the age of three. The parents of a third of them want them to go to daycare, but only 5.5% can, according to the Jefferies report.

More wealth equals fewer children

Birth rates in richer countries tend to be lower than in developing nations. This is known as a “demographic-economic paradox” which means that those with more means choose to have fewer children than people with lower incomes.

“As China develops economically, it is quite possible that it will fall into the demographic-economic paradox like many other developed countries, and the birth rate could fall to a lower level than many expected,” the analysts said. from Jefferies.

Even now, Chinese couples are reluctant to have more than one child due to the high cost of raising them. While couples in Western countries seem to want two to three children, the numbers are lower in the East.

On top of that, the number of marriages is falling, also. But in Asian cultures, having children out of wedlock is much less common compared to the West.

Demographic trends like birth rates affect a nation’s businesses and economy. Aging populations are having trouble keeping up with their welfare systems, including Social Security and public pensions, as the workforce shrinks. Over time, that may increase the need for things like automation to replace missing workers.

Demographic trends are also affecting companies and stocks, albeit many decades from now, analysts at Jefferies said.

“We expect to see a continued and significant push to reduce the cost of raising children globally and more specifically in China,” they said.

That could include tax breaks, cash donations and grants.

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