Hungarian university found how much worse off a European parent is compared to a non-parent

Parents devote more than two and a half times more of their own resources to the maintenance of the society than non-parents, and parent-friendly policies do not diminish this gap, according to a Danish-Hungarian study examining 12 European countries.

Incentive packages offered by family-friendly policies in Europe are by no means enough to compensate parents for the full costs of raising children. Considering taxes and public benefits only, parents are 37% better off than non-parents. However, the balance flips if the entire package is taken into account: the average contribution of parents to the maintenance of society is more than two and a half times higher than that of non-parents, if we include less visible intra-household cash flows (for example, when parents buy goods and services for their children) and time spent on unpaid household work. This is the main conclusion of a study in which a researcher of the University of Southern Denmark and two researchers of the Corvinus University of Budapest analysed 12 European countries based on 2010 data aggregated by Eurostat, the statistical office of the EU.

Europe still penalises parents

Although Europe is aging, it is actually penalising child-rearing in financial terms

The research reveals the following: In Europe, working-age parents devote resources corresponding to their average earnings of 17.5 years on average to society (including their children) over their lifetime, while non-parents transfer resources equivalent to 6.6 years of earnings on average to the state and others during their working years. The average parent spends 4.7 years of average income on taxes and contributions net of benefits received, compared to 6.6 years in the case of a non-parent, while the value of net intra-family flows (including cash and time) is much higher in the case of parents compared to non-parents: Income of 12.8 years, as opposed to income of 0.2 years in the case of non-parents.

‘Our research shows that resources spent on child-rearing within the family are not really reflected in the statistics. This indicates that welfare states, although they are aging, continue to put the burden of producing their own future tax revenues – the next generation of taxpayers – mainly on families,’ said Róbert Iván Gál, Corvinus researcher and one of the co-authors of the study.

Mothers: time and unpaid work

Mothers contribute to the upbringing of their children mainly by spending their own time on unpaid work (household work, looking after children), and fathers help mainly by using their money to buy goods and services. On average, the burden of unpaid work is 1.6 times higher than the burden of money transfers within the family (average earnings of 7.9 years vs. 4.9 years). Overall, the contribution by parents is about 2.66 times higher than by non-parents, if money and time input within the family are also taken into account. If only intra-family and public flows of funds are considered, the ratio drops to 1.49, and if only public transfers are considered, the ratio is 0.73, so it seems to be reversed in favour of non-parents.

‘Even family-friendly policy models do not mitigate the punitive impact of the burden of raising children, which is likely to be largely borne by parents themselves through higher taxes and social security contributions. It is in Sweden and Finland where the gap between parents and non-parents is the largest, with a factor of three, while the lowest difference of 1.6 is calculated for Latvia,” notes Róbert Iván Gál.