Acton Institute Powerblog

Strong families are good for the economy – and vice versa

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Families benefit when the economy of their state or nation is robust and free, and economies also benefit when its participants embody civic and moral values. […]

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Families and free market economies: On the surface, they seem unrelated. We associate family with game nights, holiday traditions, and cute baby photos, while the economy is associated with the stock market, cold-hearted businessmen, and bloated corporations.

What these stereotypes fail to recognize is that the health of the family, as a social institution, and the health of the economy are inherently intertwined. Families benefit when the economy of their state or nation is robust and free, and economies also benefit when its participants embody civic and moral values.

Three indices related to economic freedom and pro-family policies and culture demonstrate the positive relationship between families and free economies on a global scale. Nine nations rank consistently and highly ranked for their support of the traditional family: Sweden, Norway, Denmark, Iceland, Germany, Estonia, Belgium, France, and the Netherlands, based on Acton Institute analysis of the Independent Global Index on Family (IGIF) 2016 Report, data from UNICEF and the Heritage Foundation’s 2021 Index of Economic Freedom.

One of the ways that countries can support family is through robust parental leave policies. In the United States, parents are given 12 weeks of unpaid leave by the Family and Medical Leave Act. However, Sweden gives parents a total of 480 days of paid leave which can be divided between the two parents. Women in the Netherlands receive 16 weeks of paid leave, and both parents are entitled to 26 weeks of unpaid leave.

Another type of pro-family policy is child or family allowances. Belgium offers birth grants of 1,000 euros for each child and a monthly allowance that continues until the child turns 18. Estonia has similar allowance policies, first established in the Child Benefit Act of 1992, and Iceland also introduced universal benefits for all children under the age of 7.

Additionally, childcare can be a considerable cost to families. Thus, many countries find ways to reduce the financial burden. In Denmark, “childcare is seen as a means of empowering children and supporting the development of their identities, while transmitting cultural values and encouraging their integration into society.” All children between six months and five years old are given access to subsidized childcare facilities, and over 90% of children between one and five years old are enrolled in day care. In Germany, public childcare is provided by non-profit organizations, many of which are associated with Protestant and Catholic churches. More than 90% of children ages three to five attend some form of childcare. Norway even allows parents to claim childcare and kindergarten costs as tax deductions. Last but not least, France, which has the second highest birth rate in Europe, has a calibrated income tax system that allows “families with more children [to] pay less.”

Compared with other nations, these nine, pro-family nations have some of the best and freest economies on the globe. Eight out of nine of these countries are ranked within the top 40 on Heritage’s Economic Freedom Index. When examined by their GDP, five (Germany, France, Netherlands, Sweden, and Belgium) were ranked within the top 25 economies in the world.

These data show a significant correlation between pro-family policies and greater economic freedom. On one hand, pro-family policies, such as paid maternity/paternity leave, may be the result of a stable and developed economy which can afford to offer its employees such benefits. However, data also show that providing paid leave to employees will motivate them to remain with the company and continue working in the long run, thus benefiting the organization and the overall economy.

On a universal level, it is evident that cultural beliefs will affect how individuals view and interact with the economy. World Finance reports that one cultural factor that impacts economic development is the “population’s willingness to engage in markets, whether through investment or employment. To assess this willingness to participate in markets, economists will sometimes look at the prevalence of social trust in a given community. Many studies have associated increased social trust with higher rates of trade, innovation and development in a country’s financial sector.”

Promoting the family helps foster a culture of connectedness, social integration, and trust, which can lead to a greater engagement in the marketplace. We cannot sacrifice the moral and civic role of the traditional family without simultaneously impairing the overall economy. But we also cannot undermine the economy for the sake of the family, because doing so will reduce the family’s ability to engage with and fulfill their role within society.

Jillian Schneider

Jillian Schneider is a member of the Acton Institute’s 2021 Emerging Leaders class. She is a senior at Azusa Pacific University majoring in Communication Studies and Honors Humanities. She enjoys reading C.S. Lewis, playing tennis, and watching Star Wars.