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Did Australia's Baby Bonus Increase the Fertility Rate?

Author

Listed:
  • Robert Drago

    (Pennsylvania State University, USA)

  • Katina Sawyer

    (Pennsylvania State University, USA)

  • Karina M Shreffler

    (Oklahoma State University, USA)

  • Diana Warren

    (Institute of Applied Economic and Social Research, The University of Melbourne)

  • Mark Wooden

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

In May 2004, the Australian government announced a "Baby Bonus" policy, paying women an initial A$3,000 per new child. We use household panel data from the Household, Income and Labour Dynamics in Australia Survey (N = 14,932) and a simultaneous equations approach to analyze the effects of this bonus on fertility intentions and ultimately births. The results indicate that opportunity costs influence intentions and births in predictable ways. Fertility intentions rose after the announcement of the Baby Bonus, and the birth rate is estimated to have risen modestly as a result. The marginal cost to the government for an additional birth is estimated to be at least A$124,000.

Suggested Citation

  • Robert Drago & Katina Sawyer & Karina M Shreffler & Diana Warren & Mark Wooden, 2009. "Did Australia's Baby Bonus Increase the Fertility Rate?," Melbourne Institute Working Paper Series wp2009n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2009n01
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2009n01.pdf
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    References listed on IDEAS

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    1. Peter Mcdonald, 2006. "Low Fertility and the State: The Efficacy of Policy," Population and Development Review, The Population Council, Inc., vol. 32(3), pages 485-510.
    2. Anna Christina D'Addio & Marco Mira d'Ercole, 2005. "Trends and Determinants of Fertility Rates: The Role of Policies," OECD Social, Employment and Migration Working Papers 27, OECD Publishing.
    3. Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, pages 539-555.
    4. Anne Gauthier, 2007. "The impact of family policies on fertility in industrialized countries: a review of the literature," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), pages 323-346.
    5. John Ermisch, 1988. "Econometric Analysis of Birth Rate Dynamics in Britain," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 563-576.
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    Cited by:

    1. Gordey Yastrebov, 2016. "Intergenerational Social Mobility in Soviet and Post-Soviet Russia," HSE Working papers WP BRP 69/SOC/2016, National Research University Higher School of Economics.
    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," NRN working papers 2011-16, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    3. Fan Elliott & Maitra Pushkar, 2013. "Women Rule: Preferences and Fertility in Australian Households," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-30.
    4. Mikko Myrskylä & Rachel Margolis, 2013. "Parental benefits improve parental well-being: evidence from a 2007 policy change in Germany," MPIDR Working Papers WP-2013-010, Max Planck Institute for Demographic Research, Rostock, Germany.
    5. Aleksander Berentsen & Alessandro Marchesiani & Christopher Waller, 2014. "Floor Systems for Implementing Monetary Policy: Some Unpleasant Fiscal Arithmetic," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, pages 523-542.
    6. Svetlana Biryukova & Oxana Sinyavskaya & Irina Nurimanova, 2016. "Estimating effects of 2007 family policy changes on probability of second and subsequent births in Russia," HSE Working papers WP BRP 68/SOC/2016, National Research University Higher School of Economics.
    7. Nick Parr, 2011. "The contribution of increases in family benefits to Australia’s early 21st-century fertility increase: An empirical analysis," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 25(6), pages 215-244, July.
    8. Isabella Buber-Ennser & Ralina Panova & Jürgen Dorbritz, 2013. "Fertility Intentions Of University Graduates," Demográfia English Edition, Hungarian Demographic Research Institute, vol. 56(5), pages 5-34.
    9. Gaitz, Jason & Schurer, Stefanie, 2017. "Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation," IZA Discussion Papers 10525, Institute for the Study of Labor (IZA).
    10. Beatrice Brunner & Andreas Kuhn, 2014. "Announcement effects of health policy reforms: evidence from the abolition of Austria’s baby bonus," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 373-388, May.
    11. 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).

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