Cash Transfers and Fertility: How the Introduction and Cancellation of a Child Benefit Affected Births and Abortions

Abstract

We study the impact of a universal child benefit on fertility, identifying separately the effects driven by conceptions and those by abortions, and analyzing the potentially asymmetric impact of the benefit's introduction and its later cancellation. We focus on a generous lump-sum maternity allowance that was introduced in Spain in 2007 and then eliminated in 2010. Using administrative, population-level data, we create a panel data set of the 50 Spanish provinces, with monthly data on birth rates and weekly data on abortion rates between 2000 and 2017. Our identification is based on the timing of the introduction and cancellation of the policy (both announcement and implementation), from which we infer when the changes in births and abortions can be expected. We find that the introduction of the policy led to a 3% increase in birth rates, due to both a decrease in abortions and an increase in conceptions. The announcement of the cancellation led to a transitory increase in birth rates just before the benefit termination was implemented, driven by a short-term decrease in abortions. The actual cancellation then led to a 6% decline in birth rates. A heterogeneity analysis suggests that the positive fertility effect of the benefit's introduction was driven by high-skilled parents, while the negative impact of the cancellation was larger among low-skilled and out-of-labor-force parents, and in poorer regions and areas that were more affected by the 2008 recession. We also find suggestive evidence that the child benefit had both a timing ("tempo") effect, such that some women had children earlier, and a level ("quantum") effect, where some women had more children than they would have had otherwise. JEL Codes: J13, J18

Paid childcare leave, fertility, and female labor supply in South Korea

“…Specifically, these estimations are useful for gaining insights into the behavioral responses at the thresholds. It is important to note that because we have survey data with a small sample size relative to many administrative data sets used in this literature, e.g Raute ( 2019) and González and Trommlerová (2021), these estimates can be imprecise. For this reason, we use these estimations to supplement the analysis, but they do not constitute the core estimations in this paper.…”

“…So, the marginal fertility incentives are positive at the lower threshold and negative at the higher threshold. A similar exercise is conducted by González and Trommlerová (2021) who study the impacts of providing and then taking away fertility subsidies in Spain.…”

“…Like Milligan (2005) and Cohen et al (2013), Laroque and Salanié (2014) also consider the e↵ects of a child credit estimating a static structural nested logit model using French fertility data and find large e↵ects. 4 Finally, González and Trommlerová (2021) study the e↵ects of a child subsidy in Spain using rich administrative data and find that its implementation increased fertility by 3% whereas its cancellation decreased fertility by 6%.…”

Does Cutting Child Benefits Reduce Fertility in Larger Families? Evidence from the Uk’S Two-Child Limit

“…These studies suggest quite large positive "elasticities" of fertility with respect to benefits. A number of other empirical studies in developed countries suggest positive fertility effects from the expansion of benefits (González & Trommlerová 2021). Evidence of negative fertility effects from benefit cuts or withdrawals is thinner, but there are some indications of this (Cohen, Dehejia & Romanov 2013, González & Trommlerová 2021.…”

Baby bonus in Switzerland: Effects on fertility, newborn health, and birth‐scheduling

“…More generally, there is a large and growing strand of literature analyzing the impact of cash transfers on fertility (Cohen et al., 2013 ; González, 2013 ; González and Trommlerová, 2021 ; Kearney, 2004 ; Laroque and Salanié, 2014 ; Milligan, 2005 ). Several of these studies find an impact on fertility when parents face financial support.…”