The Effects of Cash Transfer Fertility Incentives and Parental Leave Benefits on Fertility and Labor Supply: Evidence from Two Natural Experiments

Xiaoling Ang ()

Journal of Family and Economic Issues, 2015, vol. 36, issue 2, 263-288

Abstract: This paper examined the labor supply and fertility effects of fertility incentives by making use of two major policy changes that occurred in Canada over the past 25 years: the Quebec Parental Insurance Program which provided generous parental leave benefits, and the series of cash-transfer fertility incentives introduced in Quebec in the 1980s. The empirical work for these projects was conducted using confidential versions of the Canadian Census and the Labour Force Surveys on-site at Statistics Canada. I found that while increases in the generosity of parental leave benefits substantially increased the birth rate and induced increases in labor supply among women of childbearing age, cash-transfer fertility incentives only slightly increased birth rates and decreased female labor supply. The net government cost of each additional birth due to an increase in the generosity of parental leave programs was $15,828 in 2008 Canadian dollars, whereas the net government cost of an additional birth due to cash-transfer fertility incentives was $223,625 in 2008 Canadian dollars. Therefore, paid parental leave is a low-cost way to increase fertility whereas the price per additional birth due to cash-transfer fertility incentives is quite high. Copyright Springer Science+Business Media New York (outside the USA) 2015

Keywords: Fertility incentive; Fertility; Labor supply; Parental leave; Canada; Natural experiment (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s10834-014-9394-3

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