Lifetime Impact of Cash Transfer on Fertility

Young-Il Kim, Sogang University

In most OECD countries, fertility level is below the natural generation replacement level. A number of undesirable social and economic effects stem from decreasing population and rising age composition of population. To counter decreasing fertility, many OECD countries implement pro-natal policies including direct cash transfer schemes. Impact of cash schemes are estimated in many countries including Germany, Sweden, France and Israel. However evaluations of long run impact of such policies are surprisingly rare. We investigate whether the cash transfer increases completed fertility, exploiting quasi-experiment arising from a pro-natal cash transfer called ANC (Allowance for Newborn Children). We first devise a measure of ANC impact for different birth cohorts using age-specific fertility rates because the policy lasted for a decade and it affected cohorts with different intensities at different ages. The results show that ANC impact on fertility has little permanent component.