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Can Targeted Child Benefits Affect Fertility? Evidence from a Natural Experiment

Author

Listed:
  • Lyssiotou Panayiota

    (Department of Economics, University of Cyprus, P.O. Box 20537, 1678Nicosia, Cyprus)

Abstract
This paper contributes to the literature on whether targeted cash child benefits can affect fertility and, specifically, induce families to have more than two children. We exploit the introduction of a monthly non-means tested cash child benefit paid only to families with at least four children. We apply a quasi experimental methodology since the reform is expected to have increased births of fourth child relative to births of third child or higher than four. We find robust evidence that the reform increased significantly the treated family’s probability to have a (fourth) child by about 5% and had no effect on births greater than four. In the post reform period, the control group’s probability to have a (third) child was not significantly different than before the reform. In particular, the finding that the probability of birth among parities greater than four was not affected by the reform supports that what we are estimating is a response of the targeted family to the introduction of the child benefit and not a change in the fertility preferences of families with many children. Other changes (besides the reform) had a negative effect on the probability to have a child that was reversed only for the birth of fourth child among treated families due to the economic incentives created by the reform.

Suggested Citation

  • Lyssiotou Panayiota, 2021. "Can Targeted Child Benefits Affect Fertility? Evidence from a Natural Experiment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(3), pages 921-965, July.
    • Handle: RePEc:bpj:bejeap:v:21:y:2021:i:3:p:921-965:n:13
    DOI: 10.1515/bejeap-2020-0165
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    More about this item

    Keywords

    fertility; child benefits; financial incentives; unbalanced sex ratios; female labour force participation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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