Do European welfare states overinvest in human capital?

In 1994 Nobel Prize winning economist Gary Becker gave a lecture at the World Bank in which he noted that, given finite resources, parents must choose between having fewer, more educated/healthy, children or larger numbers of less educated/healthy ones. Parents unbound by welfare states would, perhaps, make these choices in a manner which optimizes the total number of grandchildren (or the likelihood that some children/grandchildren will take care of them in their old age). Welfare states surpress population growth both because they force parents to invest in human capital at rates above they would otherwise choose (e.g. taxes that pay for education or healthcare) and because social-security/pension systems force other people’s children to pay for old age (decreasing the incentives to produce one’s own children to guarantee this.) Unless Europe gets rid of its welfare states, the result will be Eurabia (perhaps it is too late).

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