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The effects of a universal child benefit

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Abstract

I study the impact of a universal child benefit on fertility and family well-being. I exploit the unanticipated introduction of a new, sizeable, unconditional child benefit in Spain in 2007, granted to all mothers giving birth on or after July 1, 2007. The regression discontinuity-type design allows for a credible identification of the causal effects. I find that the benefit did lead to a significant increase in fertility, as intended, part of it coming from an immediate reduction in abortions. On the unintended side, I find that families who received the benefit did not increase their overall expenditure or their consumption of directly child-related goods and services. Instead, eligible mothers stayed out of the labor force significantly longer after giving birth, which in turn led to their children spending less time in formal child care and more time with their mother during their first year of life. I also find that couples who received the benefit were less likely to break up the year after having the child, although this effect was only short-term. Taken together, the results suggest that child benefits of this kind may successfully increase fertility, as well as affecting family well-being through their impact on maternal time at home and family stability.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1281.

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Date of creation: Sep 2011
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Handle: RePEc:upf:upfgen:1281

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Child benefit; policy evaluation; fertility; regression discontinuity; labor supply; consumption;

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References

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  1. 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.
  2. Kuhn, Peter J. & Kooreman, Peter & Soetevent, Adriaan R. & Kapteyn, Arie, 2010. "The Effects of Lottery Prizes on Winners and their Neighbors: Evidence from the Dutch Postcode Lottery," IZA Discussion Papers 4950, Institute for the Study of Labor (IZA).
  3. Rita Ginja, 2010. "Income Shocks and Investments in Human Capital," 2010 Meeting Papers 1165, Society for Economic Dynamics.
  4. Jennifer Ward-Batts, 2003. "Out of the Wallet and into the Purse: Using Micro Data to Test Income Pooling," Claremont Colleges Working Papers 2003-10, Claremont Colleges.
  5. Carneiro, Pedro & Løken, Katrine & Salvanes, Kjell G, 2010. "A flying start? Long term consequences of maternal time investments in children during their first year of life," CEPR Discussion Papers 8124, C.E.P.R. Discussion Papers.
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  7. Raquel Bernal, 2008. "The Effect Of Maternal Employment And Child Care On Children'S Cognitive Development," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1173-1209, November.
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  9. Bénédicte Apouey & Andrew E. Clark, 2013. "Winning Big But Feeling No Better? The Effect of Lottery Prizes on Physical and Mental Health," CEP Discussion Papers dp1228, Centre for Economic Performance, LSE.
  10. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  11. Kevin Milligan & Mark Stabile, 2008. "Do Child Tax Benefits Affect the Wellbeing of Children? Evidence from Canadian Child Benefit Expansions," NBER Working Papers 14624, National Bureau of Economic Research, Inc.
  12. Michael Baker & Kevin Milligan, 2010. "Evidence from Maternity Leave Expansions of the Impact of Maternal Care on Early Child Development," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
  13. Gordon B. Dahl & Lance Lochner, 2011. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20113, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
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  15. Manuel Bagues & Berta Esteve-Volart, 2011. "Politicians' Luck of the Draw: Evidence from the Spanish Christmas Lottery," Working Papers 2011-01, FEDEA.
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  17. Kevin Milligan & Mark Stabile, 2009. "Child Benefits, Maternal Employment, and Children's Health: Evidence from Canadian Child Benefit Expansions," American Economic Review, American Economic Association, vol. 99(2), pages 128-32, May.
  18. Charles L. Baum II, 2003. "Does Early Maternal Employment Harm Child Development? An Analysis of the Potential Benefits of Leave Taking," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 381-408, April.
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Cited by:
  1. Beatrice Brunner & Andreas Kuhn, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns’ Health: Evidence from the Abolition of Austria’s Baby Bonus," NRN working papers 2011-16, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  2. Beatrice Brunner & Andreas Kuhn, 2011. "Financial incentives, the timing of births, birth complications, and newborns' health: Evidence from the abolition of Austria's baby bonus," ECON - Working Papers 048, Department of Economics - University of Zurich.
  3. Brunner, Beatrice & Kuhn, Andreas, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns' Health: Evidence from the Abolition of Austria's Baby Bonus," IZA Discussion Papers 6141, Institute for the Study of Labor (IZA).
  4. Christina Felfe & Rafael Lalive, 2013. "Early Child Care and Child Development: For Whom It Works and Why," SOEPpapers on Multidisciplinary Panel Data Research 536, DIW Berlin, The German Socio-Economic Panel (SOEP).

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