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The effect of family welfare support on the likelihood of having another child and parents’ labor supply

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  • Milovanska-Farrington, Stefani

Abstract

Governments have recently attempted to reverse the below-replacement fertility rates in Europe by reducing child-rearing costs through child benefits, grants and paid leaves. This article examines the causal effect of family allowances on the likelihood of having another child, and on the extensive and intensive margins of labor supply. Evidence from Switzerland suggests that higher child benefits incentivize parents to have more children but do not affect their employment choice. The effect is larger for low-income families. These findings imply that policies aimed at improving the economic well-being of families are likely to increase fertility rates without distorting labor market outcomes.

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  • Milovanska-Farrington, Stefani, 2019. "The effect of family welfare support on the likelihood of having another child and parents’ labor supply," Research in Economics, Elsevier, vol. 73(3), pages 243-263.
    • Handle: RePEc:eee:reecon:v:73:y:2019:i:3:p:243-263
    DOI: 10.1016/j.rie.2019.07.005
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    Cited by:

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    2. Stefani Milovanska-Farrington, 2022. "The effect of child benefits on financial difficulties and spending habits: evidence from Poland’s Family 500 + program," International Economics and Economic Policy, Springer, vol. 19(4), pages 719-739, October.

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    More about this item

    Keywords

    Allowance; Fertility; Employment; Endogeneity; Instrument; DD;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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