Fertility Response to Financial Incentives-Evidence from the Working Families Tax Credit in the UK
The introduction of the 1999 Working Families Tax Credit (WFTC) in the UK encouraged low income families with children to enter the labor market. The tax credit, however, may have had the unintended side effect of increasing the childbearing of these households. While many studies have looked at the importance of WFTC on the female labor supply, only few have estimated the impact it had on fertility decisions of British families. This paper employs the 1995 to 2003 British Household Panel Survey and identifies the policy impact of WFTC by observing the change in the probability of birth as well as the timing of birth using the difference in differences estimator. The main findings of this paper suggest that single women responded to the policy introduction by reducing the probability of birth and prolonging the birth intervals across all birth parity. For women with partners, on the other hand, the estimates indicate that financial incentives did not encourage them to enter motherhood but it rather induced women to have their second birth quicker.
|Date of creation:||2008|
|Contact details of provider:|| Postal: CV4 7AL COVENTRY|
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mike Brewer & Anita Ratcliffe & Sarah Smith (Tanner), 2008.
"Does welfare reform affect fertility? Evidence from the UK,"
IFS Working Papers
W08/09, Institute for Fiscal Studies.
- Mike Brewer & Anita Ratcliffe & Sarah Smith, 2007. "Does Welfare Reform Affect Fertility? Evidence from the UK," The Centre for Market and Public Organisation 07/177, Department of Economics, University of Bristol, UK.
- Laroque, Guy & Salanié, Bernard, 2008.
"Does Fertility Respond to Financial Incentives?,"
IZA Discussion Papers
3575, Institute for the Study of Labor (IZA).
- Guy Laroque & Bernard Salanié, 2008. "Does Fertility Respond to Financial Incentives ?," Working Papers 2008-10, Centre de Recherche en Economie et Statistique.
- Guy Laroque & Bernard Salanié, 2008. "Does Fertility Respond to Financial Incentives?," CESifo Working Paper Series 2339, CESifo Group Munich.
- Laroque, Guy & Salanié, Bernard, 2005. "Does Fertility Respond to Financial Incentives?," CEPR Discussion Papers 5007, C.E.P.R. Discussion Papers.
- Vegard Skirbekk & Hans-Peter Kohler & Alexia Prskawetz, 2004. "Birth month, school graduation, and the timing of births and marriages," Demography, Springer;Population Association of America (PAA), vol. 41(3), pages 547-568, August.
- Stewart, Mark B., 2002.
"The Impact of the Introduction of the UK Minimum Wage on the Employment Probabilities of Low Wage Workers,"
Royal Economic Society Annual Conference 2002
169, Royal Economic Society.
- Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, 03.
- Stewart, Mark B., 2002. "The Impact Of The Introduction Of The Uk Minimum Wage On The Employment Probabilities Of Low Wage Workers," The Warwick Economics Research Paper Series (TWERPS) 630, University of Warwick, Department of Economics.
- Wendy Tanisha Dyer & Robert W. Fairlie, 2003. "Do Family Caps Reduce Out-of-Wedlock Births? Evidence from Arkansas, Georgia, Indiana, New Jersey and Virginia," Working Papers 877, Economic Growth Center, Yale University.
- Ted Joyce & Robert Kaestner & Sanders Korenman & Stanley Henshaw, 2004. "Family Cap Provisions and Changes in Births and Abortions," NBER Working Papers 10214, National Bureau of Economic Research, Inc.
- Blundell, Richard & Macurdy, Thomas, 1999.
"Labor supply: A review of alternative approaches,"
Handbook of Labor Economics,
in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695
- Neeraj Kaushal & Robert Kaestner, 2001. "From Welfare to Work: Has Welfare Reform Worked?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(4), pages 699-719.
- Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
- Guy Laroque & Bernard Salanié, 2003.
"Fertility and Financial Incentives in France,"
2003-32, Centre de Recherche en Economie et Statistique.
- Phillip B. Levine & David J. Zimmerman, 1999. "An empirical analysis of the welfare magnet debate using the NLSY," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(3), pages 391-409.
- Ann E. Horvath-Rose & H. Elizabeth Peters, 2000. "Welfare Waivers and Non-Marital Childbearing," JCPR Working Papers 128, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
- Leonardo Grilli, 2005. "The random-effects proportional hazards model with grouped survival data: a comparison between the grouped continuous and continuation ratio versions," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(1), pages 83-94.
- Marco Francesconi & Wilbert van der Klaauw, 2007. "The Socioeconomic Consequences of "In-Work" Benefit Reform for British Lone Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
- Suzanne Ryan & Jennifer Manlove & Sandra Hofferth, 2006. "State-level Welfare Policies and Nonmarital Subsequent Childbearing," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 25(1), pages 103-126, 02.
- Sueyoshi, Glenn T, 1995. "A Class of Binary Response Models for Grouped Duration Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 411-431, Oct.-Dec..
- Kevin Milligan, 2002.
"Subsidizing the Stork: New Evidence on Tax Incentives and Fertility,"
NBER Working Papers
8845, National Bureau of Economic Research, Inc.
- Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 539-555, August.
- Melissa Schettini Kearney, 2002.
"Is There an Effect of Incremental Welfare Benefits on Fertility Behavior? A Look at the Family Cap,"
NBER Working Papers
9093, National Bureau of Economic Research, Inc.
- Melissa Schettini Kearney, 2004. "Is There an Effect of Incremental Welfare Benefits on Fertility Behavior?: A Look at the Family Cap," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
- R. A. Moffitt, "undated". "The Effect of Welfare on Marriage and Fertility: What Do We Know and What Do We Need to Know?," Institute for Research on Poverty Discussion Papers 1153-97, University of Wisconsin Institute for Research on Poverty.
- Joëlle Sleebos, 2003. "Low Fertility Rates in OECD Countries: Facts and Policy Responses," OECD Labour Market and Social Policy Occasional Papers 15, OECD Publishing.
- Narendranathan, W & Stewart, Mark B, 1993. "How Does the Benefit Effect Vary as Unemployment Spells Lengthen?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(4), pages 361-381, Oct.-Dec..
- Radha Jagannathan & Michael J. Camasso & Mark Killingsworth, 2004. "New Jersey's Family Cap Experiment: Do Fertility Impacts Differ by Racial Density?," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 431-460, April.
- Bloemen, Hans & Kalwij, Adriaan S., 2001. "Female labor market transitions and the timing of births: a simultaneous analysis of the effects of schooling," Labour Economics, Elsevier, vol. 8(5), pages 593-620, December.
- Reagan Baughman & Stacy Dickert-Conlin, 2003. "Did Expanding the EITC Promote Motherhood?," American Economic Review, American Economic Association, vol. 93(2), pages 247-251, May.
- Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-1475, September.
- Edith Duclos & Pierre Lefebvre & Philip Merrigan, 2001. "A 'Natural Experiment' on the Economics of Storks: Evidence on the Impact of Differential Family Policy on Fertility Rates in Canada," Cahiers de recherche CREFE / CREFE Working Papers 136, CREFE, Université du Québec à Montréal.
When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:851. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash)
If references are entirely missing, you can add them using this form.