Can gChild Benefit h overcome the low fertility rate in Japan? Effects of Child Benefit Policy Expansion

This study clarifies the effect of the expansion of Japan fs Child Benefit Policy (CB) on parental demands for ensuring child quality from the perspective of three child-rearing @environments: childcare, culture, and education. The fixed-effect model was employed as the primary estimation method with the Osaka University Preference Parameters Study, as the study required large-scale microdata not only covering specific individuals but also their families. It was found that, compared with the control group (parents with only high school children aged 16-18 years), the CB expansion, on average, increased the demand for the childcare environment. The subsample analysis found that parents with only preschool children (0-6 years) expected a better childcare environment and those with only primary school children (7-12 years) demanded a better educational environment. The results indicate that the unpredicted expansion of CB led parents to react differently regarding demands for child quality based on their child fs age. Hence, it is proposed that when introducing new financial support without thresholds, the government should carefully choose target households that can avail the benefit by considering household income, child characteristics, and other factors.