Childcare is expensive everywhere. But this country tops the list

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

China is in second place, followed by Italy. The United States is sandwiched 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 is the most expensive place to raise kids,” the Jefferies researchers say.

Much of this is the cost of education, and the cost and availability of care when the child is at an earlier age. Until recently, preschools in China were mostly private, Jeffreys said.

Occupies more than $75,000 for raising a child under 18 in China and another $22,000 for university education.

While it sounds like tuition is much cheaper than students in the United States might face, there is a key difference: “In many other Western countries, government-provided student loans are more common, and the burden is taken off the parents and put on the children themselves. ,” Jefferies analysts said.

In America, for example, 55% of undergraduate students graduated with debt in the 2019-2020 academic year, according to college board data.

What can the government do

Legislators have many options to lower the cost of having children, including subsidizing childcare to bridge the gap between people with different incomes.

Beijing is already stepping in to make extra-curricular learning more accessible. Next on the list could be the cost of nursery and daycare, Jefferies analysts say.

“We understand that the government wants the state to provide these services and/or regulate prices for private services,” they said.

The Chinese government has announced in its current five-year plan that it aims to increase the number of places in kindergartens for children under the age of three. age to 4.5 per 1,000 people by 2025, two and a half times more than the current figure of 1.8 per 1,000 people. There are currently 42 million children under the age of three in China. The parents of one-third of them want them to go to kindergarten, but only 5.5% can actually do it, according to Jeffreys’ report.

More wealth – less children

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

“As China develops economically, it is very likely that it, like many other developed countries, will fall into a demographic-economic paradox, and the birth rate may fall to lower levels than many expected,” Jefferies analysts said.

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, in the East the number is less.

In addition, the number of marriages is falling, too much. But in Asian cultures, having children out of wedlock is much less common than in the West.

Demographic trends such as birth rates affect the business and economy of a country. An aging population is struggling to manage their welfare systems, including social security and state pensions, as the working population shrinks. Over time, this can increase the need for things like automation to replace absent workers.

Jefferies analysts say demographic trends are also affecting companies and stocks, albeit for decades to come.

“We expect to see a permanent and significant push to lower the cost of raising children around the world and in China in particular,” they said.

This may include tax credits, cash payments and subsidies.

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