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The Effects of Cash Transfer Fertility Incentives and Parental Leave Benefits on Fertility and Labor Supply: Evidence from Two Natural Experiments

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  • Xiaoling Ang

Abstract

This paper examined the labor supply and fertility effects of fertility incentives by making use of two major policy changes that occurred in Canada over the past 25 years: the Quebec Parental Insurance Program which provided generous parental leave benefits, and the series of cash-transfer fertility incentives introduced in Quebec in the 1980s. The empirical work for these projects was conducted using confidential versions of the Canadian Census and the Labour Force Surveys on-site at Statistics Canada. I found that while increases in the generosity of parental leave benefits substantially increased the birth rate and induced increases in labor supply among women of childbearing age, cash-transfer fertility incentives only slightly increased birth rates and decreased female labor supply. The net government cost of each additional birth due to an increase in the generosity of parental leave programs was $15,828 in 2008 Canadian dollars, whereas the net government cost of an additional birth due to cash-transfer fertility incentives was $223,625 in 2008 Canadian dollars. Therefore, paid parental leave is a low-cost way to increase fertility whereas the price per additional birth due to cash-transfer fertility incentives is quite high. Copyright Springer Science+Business Media New York (outside the USA) 2015

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  • Xiaoling Ang, 2015. "The Effects of Cash Transfer Fertility Incentives and Parental Leave Benefits on Fertility and Labor Supply: Evidence from Two Natural Experiments," Journal of Family and Economic Issues, Springer, vol. 36(2), pages 263-288, June.
    • Handle: RePEc:kap:jfamec:v:36:y:2015:i:2:p:263-288
    DOI: 10.1007/s10834-014-9394-3
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    2. Jac Thomas & Francisco Rowe & Paul Williamson & Eric S. Lin, 2022. "The effect of leave policies on increasing fertility: a systematic review," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-16, December.
    3. Joan E. Madia & Francesco Moscone & Asieh Hosseini Tabaghdehi & Jong-Chol An & Changkeun Lee, 2024. "Fertility Decline and Tax Revenues in South Korea," FBK-IRVAPP Working Papers 2024-02, Research Institute for the Evaluation of Public Policies (IRVAPP), Bruno Kessler Foundation.
    4. Ann-Zofie Duvander & Trude Lappegard & Mats Johansson, 2020. "Impact of a Reform Towards Shared Parental Leave on Continued Fertility in Norway and Sweden," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 39(6), pages 1205-1229, December.
    5. Janna Bergsvik & Agnes Fauske & Rannveig Kaldager Hart, 2021. "Can Policies Stall the Fertility Fall? A Systematic Review of the (Quasi‐) Experimental Literature," Population and Development Review, The Population Council, Inc., vol. 47(4), pages 913-964, December.
    6. Christopher R. Tamborini, 2021. "Family and Health over the Past Decade: Review of Selected Studies and Areas of Future Inquiry," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 62-69, July.
    7. Andra Hiriscau, 2024. "The Effect of Paid Maternity Leave on Fertility and Mothers’ Labor Force Participation," Journal of Labor Research, Springer, vol. 45(3), pages 350-384, September.
    8. Rannveig Kaldager Hart & Taryn A. Galloway, 2023. "Universal Transfers, Tax Breaks and Fertility: Evidence from a Regional Reform in Norway," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(3), pages 1-32, June.
    9. Natalie Malak & Md Mahbubur Rahman & Terry A. Yip, 2019. "Baby bonus, anyone? Examining heterogeneous responses to a pro-natalist policy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(4), pages 1205-1246, October.
    10. Allan Puur & Sanan Abdullayev & Martin Klesment & Mark Gortfelder, 2023. "Parental Leave and Fertility: Individual-Level Responses in the Tempo and Quantum of Second and Third Births," European Journal of Population, Springer;European Association for Population Studies, vol. 39(1), pages 1-28, December.
    11. Janna Bergsvik & Agnes Fauske & Rannveig K. Hart, 2020. "Effects of policy on fertility. A systematic review of (quasi)experiments," Discussion Papers 922, Statistics Norway, Research Department.
    12. Micaela Bassford & Hayley Fisher, 2020. "The Impact of Paid Parental Leave on Fertility Intentions," The Economic Record, The Economic Society of Australia, vol. 96(315), pages 402-430, December.
    13. Gordon Dahl & Katrine Loken, 2024. "Families, Public Policies, and the Labor Market," RF Berlin - CReAM Discussion Paper Series 2423, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).

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