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The Effects of a Universal Child Benefit

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  • Libertad González

Abstract

I study the impact of a universal child benefit on fertility and family well-being. I exploit the unanticipated introduction of a new, sizeable, unconditional child benefit in Spain in 2007, granted to all mothers giving birth on or after July 1, 2007. The regression discontinuity-type design allows for a credible identification of the causal effects. I find that the benefit did lead to a significant increase in fertility, as intended, part of it coming from an immediate reduction in abortions. On the unintended side, I find that families who received the benefit did not increase their overall expenditure or their consumption of directly child-related goods and services. Instead, eligible mothers stayed out of the labor force significantly longer after giving birth, which in turn led to their children spending less time in formal child care and more time with their mother during their first year of life. I also find that couples who received the benefit were less likely to break up the year after having the child, although this effect was only short-term. Taken together, the results suggest that child benefits of this kind may successfully increase fertility, as well as affecting family well-being through their impact on maternal time at home and family stability.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 574.

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Date of creation: Sep 2011
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Handle: RePEc:bge:wpaper:574

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Keywords: Child benefit; policy evaluation; fertility; regression discontinuity; labor supply; consumption;

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Cited by:
  1. Brunner, Beatrice & Kuhn, Andreas, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns' Health: Evidence from the Abolition of Austria's Baby Bonus," IZA Discussion Papers 6141, Institute for the Study of Labor (IZA).
  2. Felfe, Christina & Lalive, Rafael, 2013. "Early Child Care and Child Development: For Whom it Works and Why," CEPR Discussion Papers 9274, C.E.P.R. Discussion Papers.
  3. Beatrice Brunner & Andreas Kuhn, 2011. "Financial incentives, the timing of births, birth complications, and newborns' health: Evidence from the abolition of Austria's baby bonus," ECON - Working Papers 048, Department of Economics - University of Zurich.
  4. Beatrice Brunner & Andreas Kuhn, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns’ Health: Evidence from the Abolition of Austria’s Baby Bonus," NRN working papers 2011-16, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.

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