People in Germany are having more children again.

Figures published on Wednesday by Federal Statistics Office showed that almost 800,000 children were born in Germany in 2016, up 7 percent from the year before.

The numbers placed the country's fertility rate — the average number of births per woman — at 1.59 in 2016, a marked upswing from 1.5 the year before and the highest in 43 years.

While the birth rate was significantly higher among mothers with foreign citizenship, German women also saw a notable increase, with the rate rising from 1.43 to 1.46.

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In the past 10 years, the German government has introduced a host of family policies to tackle the demographic deficit. Notable legislation includes raising the parental leave allowance to two-thirds of income for the first year (along with two extra months that can be taken by both parents or carers at the same time).

Parents now also have the legal right to a nursery place once the child turns 1. The number of nurseries and places were subsequently expanded in some areas, but it should be noted that there are still not enough places, especially in densely populated areas. 

Parents can now also work part-time and still receive child allowances. So, are years of new family-friendly policies finally paying dividends?

Yes, but it's hard to quantify

Almost certainly, but establishing just how much is a tricky task. After all, numerous other factors can simultaneously have a bearing on birth rates, such as a country's overall economic prosperity. Experts are forced to think creatively if they want to find a direct correlation between family policy and fertility rates.

Sebastian Klüsener, the deputy head of the Laboratory of Fertility and Well-Being at Germany's Max Planck Institute for Demographic Research, once looked at the birth rate in the small German-speaking region in east Belgium and compared it to that of Germany as a whole.

"We looked at how many children families in the German-speaking region of Belgium were having given the country's more generous family policies, and we found that their birth rates are at a similar level to those among the Flemish- and French-speaking population," Klüsener told DW.

"We believe that family policies are an important factor in understanding why fertility is 0.2 to 0.3 children per woman higher in neighboring countries such as Belgium and Denmark."

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Paternity leave important

Research into family policy has also earmarked the importance of paternity leave. Under the old flatrate-allowance model, mothers were usually the ones who looked after the children at home - often because they earn less.

Germany's parental leave scheme now allows both parents to receive two-thirds of their prior earnings while on parental leave, a policy lifted right out of the Swedish model.

"This is part of an advantageous legislation that gives more flexibility to the family on how to divide responsibilities of caring for the newborn child," Livia Olah, a lecturer in Demography at Stockholm University, told DW. "This is, of course, very important when it comes to deciding whether to have a first or a second child."

Money and leave isn't enough

Financial incentives aren't enough, however, to convince parents to have more children.

After all, when Germany rolled out its parental leave reforms it failed to fill the subsequent gap in childcare.

"Parental leave is unlikely to achieve much if one of the parents has to quit their job because there's no child care available at the end of the leave," Klüsener said. "This was a big problem in Germany in the first years following the reforms, because in many regions there simply weren't enough nursery places."

"The expansion of child care for two- and three-year-olds has clearly improved the situation and this certainly could have a positive effect on the birth rate," he added.

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By comparison, French family policy shows just how important a role good child care can have on a country's birth rate. France, which boasts the highest fertility rate in Europe, has a notably shorter maternity-leave period of just six weeks leading up to the child's birth and 10 weeks thereafter.

French family policy is more focused on child care, and it is not uncommon for new parents to put the children in day care after just a couple of months.

Germany's labor market still too rigid

While German family policy seems to be doing the right things to up the birth rate, major obstacles remain.

For years, having a child was widely viewed as a career killer for a woman. While perceptions are changing for the better, the German labor market continues to throw major obstacles in a family's way.

Read more: Women's 'career or kids' dilemma drives German baby drought

Legislation allowing women to receive child allowances while working a part-time job has been a welcome change, but critics complain that the German labor markets remains too rigid. Many companies still deny employees the possibility to work on a part-time basis or from home. That leaves mostly part-time jobs, often in low-paid, low-skilled work.

And the economy would only benefit if more employers adopted a more family-friendly approach, according to Olah. "There are many jobs now that can be done from home or at a flexible time, so we don't all have to abide by these previous rigid structures," she said.

"We've seen this be used by both parents and non-parents and research indicates such solutions even increase productivity. So we're talking about multiple beneficial effects."