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The effects of a universal child benefit

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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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
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. 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.
  2. Alma Cohen & Rajeev Dehejia & Dmitri Romanov, 2007. "Do Financial Incentives Affect Fertility?," NBER Working Papers 13700, National Bureau of Economic Research, Inc.
  3. Dahl, Gordon B. & Lochner, Lance John, 2012. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," IZA Discussion Papers 6613, Institute for the Study of Labor (IZA).
  4. Bénédicte H. Apouey & Andrew E. Clark, 2014. "Winning big but feeling no better? The effect of lottery prizes on physical and mental health," PSE Working Papers halshs-00566789, HAL.
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  7. Mikael Lindahl, 2005. "Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as an Exogenous Source of Variation in Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  8. Kevin Milligan & Mark Stabile, 2011. "Do Child Tax Benefits Affect the Well-Being of Children? Evidence from Canadian Child Benefit Expansions," American Economic Journal: Economic Policy, American Economic Association, vol. 3(3), pages 175-205, August.
  9. Manuel Bagues & Berta Esteve-Volart, 2011. "Politicians' Luck of the Draw: Evidence from the Spanish Christmas Lottery," Working Papers 2011-01, FEDEA.
  10. Blau, Francine D & Grossberg, Adam J, 1992. "Maternal Labor Supply and Children's Cognitive Development," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 474-81, August.
  11. Carneiro, Pedro & Loken, Katrine Vellesen & Salvanes, Kjell G., 2010. "A Flying Start? Long Term Consequences of Maternal Time Investments in Children During Their First Year of Life," IZA Discussion Papers 5362, Institute for the Study of Labor (IZA).
  12. Rita Ginja, 2010. "Income Shocks and Investments in Human Capital," 2010 Meeting Papers 1165, Society for Economic Dynamics.
  13. Bernal, Raquel & Keane, Michael P., 2010. "Quasi-structural estimation of a model of childcare choices and child cognitive ability production," Journal of Econometrics, Elsevier, vol. 156(1), pages 164-189, May.
  14. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Working Papers 13039, National Bureau of Economic Research, Inc.
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  20. repec:pse:psecon:2009-09 is not listed on IDEAS
  21. Kasey Buckles & Daniel M. Hungerman, 2008. "Season of Birth and Later Outcomes: Old Questions, New Answers," NBER Working Papers 14573, National Bureau of Economic Research, Inc.
  22. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  23. Christopher J. Ruhm, 1998. "Parental Leave and Child Health," NBER Working Papers 6554, National Bureau of Economic Research, Inc.
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