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The Effects of Large Universal Child Benefits on Female Labour Supply

Author

Listed:
  • Magda, Iga

    (Warsaw School of Economics)

  • Kiełczewska, Aneta

    (Institute for Structural Research (IBS))

  • Brandt, Nicola

    (OECD)

Abstract

In 2016 the Polish government introduced a large new child benefit, called "Family 500+", with the aim to increase fertility from a low level and reduce child poverty. The benefit is universal for the second and every further child and means-tested for the first child. Increasing out-of-work income significantly, the transfer can reduce incentives to participate in the labour market. We study the impact of the new benefit on female labour supply, using Polish Labour Force Survey data. Based on a difference-in-differences methodology we find that the labour market participation rates of women with children decreased after the introduction of the benefit compared to childless women. The estimates suggest that by mid-2017 the labour force participation rate of mothers dropped by 2-3 percentage points, depending on the estimation specification, as a result of the "Family 500+" benefit. The effect was higher among women with lower levels of education and living in small towns.

Suggested Citation

  • Magda, Iga & Kiełczewska, Aneta & Brandt, Nicola, 2018. "The Effects of Large Universal Child Benefits on Female Labour Supply," IZA Discussion Papers 11652, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11652
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    References listed on IDEAS

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    Cited by:

    1. Filip Premik, 2021. "Estimating the effects of universal transfers: new ML approach and application to labor supply reaction to child benefits," GRAPE Working Papers 54, GRAPE Group for Research in Applied Economics.
    2. Alena Bicakova & Klara Kaliskova, 2021. "Career-breaks and Maternal Employment in CEE Countries," CERGE-EI Working Papers wp706, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Monika Mynarska & Zuzanna Brzozowska, 2022. "Things to Gain, Things to Lose: Perceived Costs and Benefits of Children and Intention to Remain Childless in Poland," Social Inclusion, Cogitatio Press, vol. 10(3), pages 160-171.
    4. Filip Premik, 2022. "Evaluating Poland’s Family 500+ Child Support Programme," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 1-19.
    5. Michał Myck & Kajetan Trzciński, 2019. "From Partial to Full Universality: The Family 500+ Programme in Poland and its Labor Supply Implications," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(03), pages 36-44, October.
    6. Janusz Jabłonowski, 2022. "Crowding Out of Informal Economy Labour Supply by Unconditional Child Benefits," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 31-43.

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    More about this item

    Keywords

    labour market participation; child allowance; social transfers; family policy;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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