For years, Iran has tried to encourage higher birth rates through financial incentives and social support programs. Yet one major obstacle has consistently undermined these efforts: persistent inflation. While policymakers have expanded benefits under the Family Protection and Youth Population Law, the country's prolonged period of high inflation has steadily eroded the real value of these incentives, limiting their effectiveness.
Iran has experienced inflation above 30% for more than seven consecutive years, with annual rates surpassing 40% and even 50% during some periods. Such prolonged price instability has weakened household purchasing power and made long-term financial planning increasingly difficult. As a result, even well-designed support programs have struggled to influence family decisions about having children.
The challenge is not simply the size of government assistance but the economic environment in which it is delivered. Numerous studies on fertility behavior suggest that families are more likely to have children when they feel economically secure and confident about the future. Predictable income, stable living costs and confidence in future living standards are often more influential than one-time financial incentives.
High inflation directly undermines these conditions. When prices rise rapidly, families find it difficult to estimate future expenses for housing, education, healthcare and childcare. Even generous loans or cash payments lose much of their purchasing power within a relatively short period. Consequently, households may view government support as temporary and insufficient rather than as a meaningful contribution to the long-term costs of raising children.
Hidden Tax
This erosion of support is one of inflation's most damaging social consequences. A loan or subsidy that appears significant when introduced may cover only a fraction of actual expenses a few years later. Inflation effectively acts as a hidden tax, reducing the real value of government assistance without any formal policy change.
At the same time, inflation raises the cost of nearly every aspect of child-rearing. Housing prices, rents, medical expenses, food costs, transportation and education have all increased substantially in recent years. Families therefore evaluate the lifetime financial commitment of raising a child rather than focusing solely on government benefits. If they expect living costs to rise faster than their incomes, they are naturally less willing to expand their families.
Recent findings by the Majlis Research Center reinforce this argument. Its people-centered evaluation of Iran's fertility policy found that public satisfaction with implementation of the Family Protection and Youth Population Law remains relatively low, with an overall score of only 39.4 out of 100. The report concludes that citizens place greater importance on addressing structural economic challenges than on expanding temporary financial incentives.
The law, approved in 2021, introduced a wide range of measures, including childbirth loans, insurance support, maternity benefits and housing incentives. However, the evaluation indicates that many families continue to prioritize stable livelihoods over one-time assistance. Affordable housing emerged as one of the most important foundations for family formation, while mothers emphasized the need for stronger job security after childbirth and lower career costs associated with raising children.
The report also highlights concerns extending beyond financial issues. Families expressed worries about safe childbirth, childcare services and the challenges of raising teenagers. Researchers found that receiving at least one-third of the promised services improved public evaluations, but implementation gaps and unequal access remained significant obstacles.
Global Lessons
International experience offers similar lessons. Countries that have managed to stabilize or increase fertility rates have generally done so within relatively stable macroeconomic environments characterized by low inflation and predictable economic conditions. Such stability allows households to make long-term decisions about home ownership, employment and children's education with greater confidence.
By contrast, countries experiencing chronic inflation and economic uncertainty often achieve only limited success through financial incentives alone. The primary concern for families is rarely the absence of a specific subsidy but uncertainty about future living standards.
From a public policy perspective, this distinction is crucial. Measures such as childbirth loans, expanded maternity leave, subsidized housing and broader insurance coverage can strengthen population policies, but they are supporting instruments rather than the foundation of success. Macroeconomic stability remains the necessary condition upon which these complementary policies depend.
Inflation also affects public trust. When households repeatedly see the value of announced benefits diminish within a short period, confidence in future government programs inevitably weakens. This skepticism can reduce participation even if more effective policies are introduced later.
Iran's demographic challenge is therefore closely linked to its broader economic conditions. Decisions about marriage and childbearing depend on a combination of social, cultural and economic factors, but financial security remains central. Unless inflation is brought under control and macroeconomic stability is restored, even comprehensive support packages are unlikely to achieve their intended results. For Iran's population policies to succeed over the long term, stabilizing the economy must be viewed not as one policy among many, but as the essential prerequisite for every other family support initiative.
