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Can Education Subsidy Reverse Falling Fertility? The Case of Taiwan

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  • Shao-Hsun Keng
  • Sheng-Jang Sheu

Abstract

The education subsidy in Taiwan is available for government employees only. In 1996, the government ceased to index the education subsidy for inflation, which created a natural experiment ideal for studying the effect of the education subsidy on fertility. Using the difference-in-differences approach, we find that the reform reduced the fertility probability for public-sector households by 17 per cent and this negative response appears to be permanent. The estimated probability elasticity of fertility is 0.05, which is smaller than that of personal tax exemption (0.8). The results also suggest that the education subsidy has a heterogeneous effect on fertility across income groups.

Suggested Citation

  • Shao-Hsun Keng & Sheng-Jang Sheu, 2011. "Can Education Subsidy Reverse Falling Fertility? The Case of Taiwan," Journal of Development Studies, Taylor & Francis Journals, vol. 47(11), pages 1677-1698.
    • Handle: RePEc:taf:jdevst:v:47:y:2011:i:11:p:1677-1698
    DOI: 10.1080/00220388.2011.609585
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    Cited by:

    1. Jac Thomas & Francisco Rowe & Paul Williamson & Eric S. Lin, 2022. "The effect of leave policies on increasing fertility: a systematic review," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-16, December.

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