Another Inconvenient Truth: Fragile Families and the Looming Financial Crisis for the Welfare State

Abstract:     
This article examines the emerging financial crisis for governments around the western world arising from the growing fragility of family life and the increase in births to mothers without a partner living in the home. The costs of family instability are not just borne by individuals. They are to a very significant extent borne by taxpayers, who provide income support for many parents and their children, pay substantial administrative costs in ensuring income transfers through the child support system, and bear more of the costs of caring for the elderly than would be necessary if a greater number of marital and quasi-marital relationships remained intact.

The growing costs to the public purse arising from ex-nuptial births and the breakdown of parental relationships are simply unsustainable when taken together with the existing governmental debt burden, growing environmental problems, ageing populations, and the problem of decreased fertility in developed countries. Action therefore needs to be taken by governments to support programs and services that have the goal of promoting safe, stable, and nurturing relationships between children and adults and to eliminate perverse incentives to choose family forms that may not be optimal as a context for raising children.

Number of Pages in PDF File: 31

Keywords: families, children, relationships, family structure, family breakdown, welfare state, aged care

JEL Classification: I30, K10, K30

Accepted Paper Series