Robert Drago (Pennsylvania State University, USA) Katina Sawyer (Pennsylvania State University, USA) Karina Sheffler (Oklahoma State University, USA) Diana Warren () (Institute of Applied Economic and Social Research, The University of Melbourne) Mark Wooden () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
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In May 2004, the Australian government announced a "Baby Bonus" policy, paying women an initial A$3,000 per new child. We use household panel data from the Household, Income and Labour Dynamics in Australia Survey (N = 14,932) and a simultaneous equations approach to analyze the effects of this bonus on fertility intentions and ultimately births. The results indicate that opportunity costs influence intentions and births in predictable ways. Fertility intentions rose after the announcement of the Baby Bonus, and the birth rate is estimated to have risen modestly as a result. The marginal cost to the government for an additional birth is estimated to be at least A$124,000.
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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number
wp2009n01.
Length: 30 pages Date of creation: Feb 2009 Date of revision: Handle: RePEc:iae:iaewps:wp2009n01
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