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Does Welfare Reform Affect Fertility? Evidence from the UK

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Author Info
Mike Brewer
Anita Ratcliffe
Sarah Smith ()

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Abstract

This paper presents evidence on the fertility effect of welfare from a set of reforms that took place in the UK in 1999 and that substantially increased support for poorer families with children. The reforms, including the introduction of the Working Families Tax Credit and an increase in means-tested income support, raised benefits by up to 10 per cent of household income. We exploit the fact that the reforms were targeted on low-income households and use a differences-in-differences approach to evaluate their impact on fertility. A priori, the fertility effect of the reforms is ambiguous because WFTC has pro-employment effects. In practice, these are more important for lone mothers and we therefore focus on women in couples where we expect the reforms to have a positive effect on births. We find that the reforms raised the probability of birth among women in couples by around 10 per cent (implying an elasticity of 0.22). In line with previous work, the effect is greatest for first births.

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Publisher Info
Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 07/177.

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Length: 32 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:bri:cmpowp:07/177

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Related research
Keywords: Welfare reform; Fertility; Working Families Tax Credit;

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Find related papers by JEL classification:
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Williamson Hoyne, Hilary, 1997. "Does welfare play any role in female headship decisions?," Journal of Public Economics, Elsevier, vol. 65(2), pages 89-117, August. [Downloadable!] (restricted)
  2. Marco Francesconi & Wilbert van der Klaauw, 2007. "The Socioeconomic Consequences of "In-Work" Benefit Reform for British Lone Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(1). [Downloadable!] (restricted)
  3. Besley, Timothy & Case, Anne, 2000. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," Economic Journal, Royal Economic Society, vol. 110(467), pages F672-94, November. [Downloadable!] (restricted)
    Other versions:
  4. Fraser, Clive D, 2001. "Income Risk, the Tax-Benefit System and the Demand for Children," Economica, London School of Economics and Political Science, vol. 68(269), pages 105-25, February. [Downloadable!] (restricted)
  5. Joshua S. Gans & Andrew Leigh, 2006. "Born on the First of July: An (Un)natural Experiment in Birth Timing," CEPR Discussion Papers 529, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
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  6. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August. [Downloadable!] (restricted)
  7. Reagan Baughman & Stacy Dickert-Conlin, 2003. "Did Expanding the EITC Promote Motherhood?," American Economic Review, American Economic Association, vol. 93(2), pages 247-251, May. [Downloadable!]
  8. Dan Anderberg, 2008. "Tax credits, income support, and partnership decisions," International Tax and Public Finance, Springer, vol. 15(4), pages 499-526, August. [Downloadable!] (restricted)
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  9. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December. [Downloadable!] (restricted)
  10. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ohinata, Asako, 2008. "Fertility Response to Financial Incentives-Evidence from the Working Families Tax Credit in the UK," The Warwick Economics Research Paper Series (TWERPS) 851, University of Warwick, Department of Economics. [Downloadable!]
  2. Dan Anderberg & Arnaud Chevalier & Jonathan Wadsworth, 2009. "Anatomy of a Health Scare: Education, Income and the MMR Controversy in the UK," CEP Discussion Papers dp0929, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
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