Rethinking Family Policies: Fertility Choices and the Labor Market in France

This paper examines the impact of the 2014 family policy reforms in France on fertility choices and labor supply for both women and men. Using a unique policy episode that consisted in conditioning the amount of basic allowances of early childhood benefits on household income, I employ a Regression-Discontinuity Design (RDD) to examine the impact of this sharp discontinuity in the provision of child benefits on fertility and the hours of work of women and men. The analysis relies on data from the Statistics on Resources and Living Conditions in France. The dataset has the unique feature of providing administrative information on both income and social benefits. Using a “sharp” RDD specification, the results suggest that not being eligible to any family allowances for children decreases the birth probability at the household level. The results also highlight that receiving half the amount of the family allowances for children or not receiving any allowances leads to an increase in the number of hours of work per week for both women and men, compared to individuals who are eligible to the total amount of child benefits. These results are in line with the literature showing that the elimination of welfare programs is associated with an increase in working hours.