Hungary’s Demographic Failure
Levan Ramishvili
Since achieving independence in the early 1990s, the former communist nations of Eastern Europe have developed lively political scenes, with vigorous competition between left and right. And of all the resurgent rightist parties vying for power in these nations, Hungary’s Fidesz, led by Viktor Orbán, commands the second-largest and second-longest conservative majority, bested only by Poland’s Law and Justice Party. When Fidesz amended the Hungarian constitution in 2011 and again in 2013, it included a condemnation of communism, an affirmation of Hungary’s Christian heritage, and articles protecting marriage as the union of a man and a woman and encouraging childbearing. From start to finish, the document is deeply nationalist and socially conservative, and one area of its public policy in particular attracts great attention: reengineering the nation’s demography to reinforce its native Hungarian character.
When the 2015 refugee crisis in Syria heated up, Hungary built a wall to keep refugees out. It has also announced a slew of new policies to support large families: interest-free loans for houses, free cars, tax exemptions for working mothers, and numerous other programs. In a few short years, Hungary constitutionally stymied the advance of legalized same-sex marriage and forthrightly began promoting marriage and childbearing.
Hungary’s overt effort to boost birth rates while curtailing immigration is an extraordinary experiment in demographic policy, and one with enormous political ramifications. If it succeeds in reversing Hungary’s population decline, it could serve as an inspiration for similar policies in conservative-governed countries around the world. For this reason, it is vital to understand what Hungary’s population policies actually are, and what effects they are having on Hungarian society.
First, consider Orbán’s rejection of refugees. Over 2 million people immigrated into Germany in 2015, up from under 1 million in 2012, with a large share of the increase consisting of Middle Eastern refugees. But Hungary admitted just 25,000 noncitizen immigrants in 2015, a mere 4,000 more than in 2012. On a per capita basis, Germany’s immigration rate rose from three to six times Hungary’s rate between 2009 and 2012, and then to almost ten times Hungary’s rate in 2015 and 2016.
On this initiative, Orbán was successful: A huge influx of foreigners who might have been hostile to Hungarian values was prevented. But this apparent success belied a deeper problem. Data from other countries show that in 2005, some 31,000 people emigrated away from Hungary. In 2010, it was 51,000, and by 2015, it had risen to 100,000. Orbán succeeded in preventing unwanted immigration but also presided over a massive increase in emigration. Since 2015, the numbers have moderated somewhat; in 2019 just 73,000 Hungarians emigrated to other industrialized countries. To be sure, at the same time, a growing number of Hungarians who left the country have moved back to Hungary, especially those living in the far-flung corners of the former Austro-Hungarian Empire and beyond, arriving from present-day Romania, Serbia, or elsewhere. This tide of returning Hungarians has pushed the nation’s net migration rate closer to balance in recent years, but data from around Europe show a continuing increase in Hungarians outside of Hungary. On net, Hungarians are leaving Hungary behind.
While Orbán and Hungary’s conservatives may dislike the idea of welcoming lots of culturally different immigrants, they may well have no other choice, as the country’s current migration situation is a recipe for dangerously rapid population decline. This is part of the reason why Hungary’s population has fallen from nearly 11 million people in the early 1980s to under 10 million today, with no clear bottom in sight. Orbán’s signature policy of turning away migrants and building a wall may make some conservatives happy, but it threatens to turn Hungary into a demographic dead end without much of a political, economic, or cultural future.
Of course, the Hungarian government knows all this, which is why, around the same time that it adopted a staunch anti-immigrant stance, it also began to roll out a suite of pro-family initiatives. According to official statements and pro-government writers, the Hungarian government saw that birth rates were very low (about 1.25 children per woman), so it decided to help families have and raise kids. First, in 2015, came CSOK, a program that subsidized credit for home loans for couples having three kids. Then came related programs subsidizing education, minivans, home renovations, and other expenses. Then there was an income-tax program: Women who had four or more children would be exempt from income taxes. Most recently, there’s a “baby loan,” worth over $30,000, which couples can apply for after getting married, and which is forgiven in tranches as they have children.
Unfortunately, however, fertility in Hungary has barely budged. There are many ways to assess the impact of a pro-natal policy such as the CSOK program. One of the simplest is to note that since the financial incentives for a second child were over four times as generous as those for a first child, and for three or more children they were another four times more, Orbán’s government expected a big increase in third or subsequent births. But that isn’t what happened. In 2014, 22 percent of births in Hungary were third or higher, and the share of births that are third or higher has actually declined since then, reaching a low of 20 percent in 2019. For comparison, the average third-or-higher share among all formerly communist countries for which I could collect data was about 16 percent in 2014, rising to 19 percent in 2019. While most of its peers were seeing more and more women have big families, in Hungary big families got rarer.
(Source: Human Fertility Database, Eurostat, Hungarian Central Statistical Office)This simple analysis is buttressed by more sophisticated approaches. Many European countries, such as Hungary, compile high-quality data on births, classified by age of mother and order of birth, as well as reliable estimates of how many children women of a given age have already had, meaning demographers can estimate how quickly women are climbing the family-size ladder. This is a complicated math problem, but it lets us make very precise estimates of the pace of family-size expansion in a country. Between 2014 and 2017 (the year of the latest full data available), Hungarian women’s “parity progression rate” to the third birth rose by 6 percent, but throughout formerly communist countries with available data, the average increase was 11 percent.
In other words, CSOK was a flop. Hungarian fertility rates performed no better than, indeed somewhat worse than, the fertility rates of nearby countries. Since dozens of well-regarded academic studies have reliably found that pro-natal financial programs almost always succeed in boosting births, that raises an important question: What went wrong?
To answer, it’s necessary to step back a bit and better understand what CSOK was. CSOK wasn’t designed as a birth-promoting program. Hungary, like many former communist countries, has a decrepit housing stock full of tiny apartments, which leads to serious overcrowding. But Hungary’s construction companies have close ties to Fidesz, and the government also wanted to encourage more lending in Hungary’s currency (forints) to prop up a struggling financial sector. What better way to address all these issues than to issue home loans that could be used only on new construction, and to have the government assume all the financial risk?
But how could the government ensure that the new housing would be spacious enough? Simple: Tie the benefit to family size and set square-footage requirements. So what began as a program to support the finance and construction sectors went through a metamorphosis and became a “family policy.” It got enormous international media coverage, and Hungary’s leaders realized they’d stumbled upon a winning strategy: rebrand policies as conservative family-promotion and get rave reviews overseas, especially since few conservative writers speak Hungarian or can be bothered to read the fine print on CSOK. Since the Hungarian government was also facing a critical population problem and wanted to boost the birth rate, it was a natural fit.
Yet while this all explains the origin of CSOK, it doesn’t explain CSOK’s failure. For that, it’s important to understand one crucial fact: Before Orbán took power, Hungary already had one of the highest rates of government spending on families and children in the industrialized world. In 2010 Hungary may have been throwing more government money at families with kids than almost any other government on earth. But under Orbán, Hungary’s spending on children and families has actually declined. Flashy programs like CSOK offer Hungarians loans today, with a promise of loan forgiveness if they have kids. This creates few financial burdens now but contains the possibility of large payouts in the future. In the meantime, Hungary has cut spending on direct child and family benefits. Because many of the new programs are not classified in budgetary documents as child and family benefits, it is difficult to know what has happened with Hungary’s overall net support to families and children, but to a first approximation, the obvious explanation for why CSOK failed is that it was robbing Peter to pay Paul, and Hungarian families knew it.
CSOK wasn’t Fidesz’s last such program. There is one to subsidize purchases of cars with seven or more seats for families with three or more children. There’s a direct cash program giving families mortgage help for each kid they have. More recently, Hungary nationalized fertility clinics, though whether this was done to make them cheaper and boost fertility or to make sure they adhered to the Catholic beliefs that Hungary’s constitution espouses wasn’t immediately clear.
But there is some good news: The latest addition to Hungary’s suite of baby policies actually seems to be working. Beginning in 2019, Hungarian newlyweds under a certain age and without prior children could apply for a loan with an extremely heavily subsidized interest rate and with payments deferred. As the couple had children, chunks of the loan would be forgiven, so that if they had three children within ten years, they would have gotten a $35,000 cash grant with no strings attached (beyond, of course, having babies). Births in Hungary jumped upwards nine months after this program rolled out, and throughout the global “Covid baby bust,” Hungary’s births have remained at or above pre-Covid levels, an extremely rare accomplishment.
After five years of trial and error, Hungary has found a policy that works: throwing a massive pile of no-strings-attached cash at families to help them have kids. This is the opposite of CSOK’s “promise future benefits with extremely specific conditions” approach, and it is similar in principle to the generous baby bonuses that existed at various times in Australia and Quebec, which are widely known to have increased birth rates. In other words, Hungary burned through five years wasting resources before finally adopting the plan that every researcher in the field of family policy already knew works best.
Why didn’t Hungary take this obvious step earlier? The answer again seems simple: Throwing piles of unconditional cash at families has a budgetary cost, and Fidesz wanted to cut spending. It is only as Fidesz’s family policies have grown to become enormously popular and a valuable lifeline of good press abroad that Hungary’s conservatives have finally been dragged towards accepting that cash-for-kids was their only option.
Still, on migration and fertility, the key elements of demography, Hungary’s current government has not done enough to reverse the country’s impending demographic collapse. Net immigration rates are recovering a bit from the calamitous mid 2010s but remain much lower than might be desired, and their recent increase is driven almost entirely by trying to reabsorb Hungarian expatriates from poorer countries farther south and east, even as a huge number of Hungarians continue to emigrate every year for better opportunities in Germany, the U.K., and elsewhere. Fertility rates have made a modest recovery but remain critically low, far lower than the level Hungary needs for a stable population.
But there is one area where Hungary has seen extraordinary success: marriage. Hungary’s marriage rate was below average for Eastern Europe in every year between 1977 and 2018. But beginning in 2013, the marriage rate began to rise, at first slowly, then sharply, with huge leaps upwards in 2015 and 2019. Because most of Hungary’s child benefits were more generous for (or in some cases limited to) married parents, and because marital status is less costly for a couple to change than parental status, one of the biggest effects of Hungary’s pro-natal policies was simply to induce a large number of marriages.
These policy changes didn’t just lead to more marriages; they induced younger and more stable marriages. Hungary’s average age at first marriage is about the same today as it was in 2012, even as marriage ages have risen throughout most of the rest of Europe. And while younger marriages often end in divorce, divorce rates have plummeted in Hungary, falling by some measures by as much as 40 percent since 2012. These changes are not even remotely duplicated in other nearby countries.
Some of this is just reclassification, with cohabiting couples obtaining marriage documents to get benefits. But the simultaneous declines in divorce suggest it isn’t just that: Financial support for married childbearing may have actually improved family stability. Notably, the share of children born to unmarried mothers fell from 48 percent in 2015 to just 30 percent in 2020, an extraordinary decline.
Many conservatives would like to see American society become more marriage-minded, and so this outcome of Hungarian policy has an obvious appeal. But it’s important to remember that despite this rise in marriage, especially of parents, Hungarian couples still aren’t having that many babies.
In sum, some elements of Hungary’s unique demographic policies are unalloyed successes, such as the promotion of marriage. Others require much more qualification, like the record on immigration, or were outright failures, like CSOK. But while Hungary has succeeded in keeping itself strongly Hungarian by blocking immigrants, and has achieved a remarkable social transformation with respect to marriage, at the same time there has been a massive loss of Hungarians to emigration, and fertility rates remain so low that Hungary’s population will plummet this century.
Hungary’s policies thus far point to a grim reality: Policy changes, even dramatic ones, are simply not enough to create the world that many conservatives want. Hungary succeeded in achieving what might be called “compositional” aims: keeping the country 95 percent ethnic Hungarian and boosting the married share of the population. But Hungary has totally failed in what could be called “aggregate survival” aims: Fertility rates did not respond to initial pro-natal policies and remain very low, and efforts to draw the historic Hungarian diaspora back into Hungary are not fully offsetting the huge outflows of Hungarian emigrants. The result of the state-led conservatism of Hungary has not been a robust, thriving, confident Hungarian nation, but a Hungarian nation that will serve as a cautionary tale for future conservative statesmen: The push for purity of the nation will destroy its base of population. It will drive young people to seek their fortunes elsewhere, prevent new blood from arriving, and fail to boost fertility.
This does not mean that conservative pro-natalism is a lost cause; far from it. As noted above, pro-natal policies do generally succeed in boosting birth rates. For example, the largest fertility rebound in the world was a religious campaign supported by government measures during Georgia’s nationalist revival after its 2008 invasion by and war with Russia. In that case, Georgia’s fertility rose from around 1.5 children per woman to 2.2, and it remains near 2 children per woman today. Likewise, fewer babies were born to unmarried mothers in Georgia, and emigration moderated, so that Georgia’s overall population trajectory saw an extremely positive shift. The combination of cultural influence from Georgian religious leaders and “covering fire” from Georgian family-policy programs yielded a complete reversal in demographic fortunes.
The case of Georgia illuminates why Hungary has failed: Hungary’s efforts are state-led rather than state-supported. There was no groundswell of Hungarian civic and cultural leaders providing new social scripts and role models for larger families; Fidesz was elected on a platform not even of pro-natalism but of sound economic management. Without a cultural groundswell to support state policy, state-centric efforts to engineer conservative societies will founder on the rocks of demography, achieving compositional aims (marriage, Hungarian ethnicity) only at the cost of aggregate survival (total population) of the society in question, or vice versa. American conservatives interested in pro-natalism (or encouragement of marriage, or restriction of illegal immigration) need not despair or abandon their policy projects: The power of the state can play a vital role in reinforcing, ratifying, and extending a cultural movement. But unless and until conservatives actually create a culture of marriage and pro-natalism among themselves, the power of the state can only nudge the needle a bit. As long as our politicians have more divorces than children, and conservative communities have at best marginally different demographic traits from those of our progressive fellow citizens, efforts to create a conservative culture through state power will fail for lack of any actual living community to embody and extend the social forms being promoted. Far from being proof that a new conservative interventionism can succeed, Hungary is a warning about the limits of such an approach, and a reminder that politics remains, as it always has been, downstream from culture.