Subsidy for second child increases, but expected impact low

Despite the government's decision to raise the subsidy for parents having more than one child this year by 1 million won ($760), a survey suggests that the subsidy may not significantly influence parents' decisions to have another child.

“Despite implementing the voucher subsidy, a recent decrease in the total fertility rate suggests there has been no direct impact (on having another child),” said Lee Yun-jin, a senior researcher at the Korea Institute of Child Care and Education.

The voucher subsidy was introduced in 2022. Starting this year, a 2-million-won voucher is provided for the firstborn child, and a 3-million-won voucher is provided for each subsequent child.

This voucher aims to ease the financial burden on parents and can be used for postnatal care, child care products, medical expenses, food, and beverages, among other things.

According to a survey by the institute released Friday, when respondents were asked if they would be willing to have more children if the government increased the subsidy amount through vouchers, those answering "No" increased by almost 10 percentage points on-year, reaching 37.7 percent. The survey was conducted on 2,000 individuals who used the government vouchers in 2023.

"The rise in negative responses may be attributed to inflation, and there is a need for serious considerations of a more substantial increase,” Lee added.

The main reason given for why respondents answered "No" was the "insufficient voucher amount,” recording 77.1 percent.

Respondents suggested that the appropriate voucher amount should be 5.95 million won on average.

Meanwhile, postnatal care facilities were found to be the primary use of the voucher, followed by child care products, medical expenses, and then food and beverage expenses.