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Does welfare reform affect fertility? Evidence from the UK

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Author Info

  • Mike Brewer

    ()
    (Institute for Fiscal Studies and ISER, Essex University)

  • Anita Ratcliffe

    (Institute for Fiscal Studies and CMPO, University of Bristol)

  • Sarah Smith

    ()
    (Institute for Fiscal Studies and Centre for Market and Public Organisation)

Abstract

In 1999 the UK government made major reforms to the system of child-contingent benefits, including the introduction of Working Families' Tax Credit and an increase in means-tested Income Support for families with children. Between 1999-2003 government spending per-child on these benefits rose by 50 per cent in real terms, a change that was unprecedented over a thirty year period. This paper examines whether there was a response in childbearing. To identify the effect of the reforms, we exploit the fact that the spending increases were targeted at low-income households and we use the (exogenously determined) education of the woman and her partner to define treatment and control groups. We argue that the reforms are most likely to have a positive fertility effect for women in couples and show that this is the case. We find that there was an increase in births (by around 15 per cent) among the group affected by the reforms.

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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W08/09.

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Length: 43 pp.
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:ifs:ifsewp:08/09

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Keywords: Welfare reform; fertility; Working Families Tax Credit;

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References

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  1. Paul Gregg & Susan Harkness, 2003. "Welfare Reform and Lone Parents Employment in the UK," The Centre for Market and Public Organisation 03/072, Department of Economics, University of Bristol, UK.
  2. Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 539-555, August.
  3. 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.
  4. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
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  7. Laroque, Guy & Salanié, Bernard, 2003. "Fertility and Financial Incentives in France," CEPR Discussion Papers 4064, C.E.P.R. Discussion Papers.
  8. Paul Gregg & Susan Harkness & Sarah Smith, 2007. "Welfare Reform and Lone Parents in the UK," The Centre for Market and Public Organisation 07/182, Department of Economics, University of Bristol, UK.
  9. Dan Anderberg, 2007. "Tax Credits, Income Support and Partnership Decisions," CESifo Working Paper Series 2147, CESifo Group Munich.
  10. 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).
  11. 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.
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  16. 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.
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Citations

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Cited by:
  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.
  2. Chris Herbst, 2013. "Welfare reform and the subjective well-being of single mothers," Journal of Population Economics, Springer, vol. 26(1), pages 203-238, January.
  3. Azmat, Ghazala & Gonzalez, Libertad, 2009. "Targeting Fertility and Female Participation Through the Income Tax," IZA Discussion Papers 4405, Institute for the Study of Labor (IZA).
  4. Peter Haan & Katharina Wrohlich, 2009. "Can child care policy encourage employment and fertility? Evidence from a structural model," MPIDR Working Papers WP-2009-025, Max Planck Institute for Demographic Research, Rostock, Germany.
  5. Helmut Rainer & Stefan Bauernschuster & Natalia Danzer & Anita Fichtl & Timo Hener & Christian Holzner & Janina Reinkowski, 2013. "Kindergeld und Kinderfreibeträge in Deutschland: Evaluierung der Auswirkungen auf familienpolitische Ziele," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(09), pages 28-36, 04.
  6. Tibor Hanappi & Sandra Müllbacher, 2012. "Tax Incentives and Family Labor Supply in Austria," NRN working papers 2012-12, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  7. 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.
  8. Ian Dey & Fran Wasoff, 2010. "Another Child? Fertility Ideals, Resources and Opportunities," Population Research and Policy Review, Springer, vol. 29(6), pages 921-940, December.
  9. Cygan-Rehm, Kamila, 2013. "Earnings-Dependent Parental Leave Benefit and Fertility: Evidence from Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80021, Verein für Socialpolitik / German Economic Association.
  10. REINSTADLER Anne, 2011. "Luxembourg and France: Comparable Family Benefits, Comparable Fertility Levels?," CEPS/INSTEAD Working Paper Series 2011-65, CEPS/INSTEAD.
  11. Paul Gregg & Lindsey Macmillan, 2009. "Family Income and Education in the Next Generation: Exploring income gradients in education for current cohorts of youth," The Centre for Market and Public Organisation 09/223, Department of Economics, University of Bristol, UK.
  12. Jessica Todd & Paul Winters & Guy Stecklov, 2012. "Evaluating the impact of conditional cash transfer programs on fertility: the case of the Red de Protección Social in Nicaragua," Journal of Population Economics, Springer, vol. 25(1), pages 267-290, January.

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