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Did Australia's Baby Bonus Increase the Fertility Rate?

Author

Listed:
  • Robert Drago

    (Pennsylvania State University, USA)

  • Katina Sawyer

    (Pennsylvania State University, USA)

  • Karina M Shreffler

    (Oklahoma State University, USA)

  • Diana Warren

    (Institute of Applied Economic and Social Research, The University of Melbourne)

  • Mark Wooden

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

In May 2004, the Australian government announced a "Baby Bonus" policy, paying women an initial A$3,000 per new child. We use household panel data from the Household, Income and Labour Dynamics in Australia Survey (N = 14,932) and a simultaneous equations approach to analyze the effects of this bonus on fertility intentions and ultimately births. The results indicate that opportunity costs influence intentions and births in predictable ways. Fertility intentions rose after the announcement of the Baby Bonus, and the birth rate is estimated to have risen modestly as a result. The marginal cost to the government for an additional birth is estimated to be at least A$124,000.

Suggested Citation

  • Robert Drago & Katina Sawyer & Karina M Shreffler & Diana Warren & Mark Wooden, 2009. "Did Australia's Baby Bonus Increase the Fertility Rate?," Melbourne Institute Working Paper Series wp2009n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2009n01
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2009n01.pdf
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    References listed on IDEAS

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    Cited by:

    1. Beatrice Brunner & Andreas Kuhn, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns’ Health: Evidence from the Abolition of Austria’s Baby Bonus," NRN working papers 2011-16, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    2. Magdalena Smyk & Joanna Tyrowicz & Lucas van der Velde, 2021. "A Cautionary Note on the Reliability of the Online Survey Data: The Case of Wage Indicator," Sociological Methods & Research, , vol. 50(1), pages 429-464, February.
    3. Fan Elliott & Maitra Pushkar, 2013. "Women Rule: Preferences and Fertility in Australian Households," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(1), pages 1-30, April.
    4. Atalay, Kadir & Li, Ang & Whelan, Stephen, 2021. "Housing wealth, fertility intentions and fertility," Journal of Housing Economics, Elsevier, vol. 54(C).
    5. Krzysztof Makarski & Joanna Tyrowicz & Magda Malec, 2018. "Evaluating welfare and economic effects of raised fertility," GRAPE Working Papers 25, GRAPE Group for Research in Applied Economics.
    6. Bing Xu & Maxwell Pak, 2021. "Child-raising cost and fertility from a contest perspective," Public Choice, Springer, vol. 186(1), pages 9-28, January.
    7. Beatrice Brunner & Andreas Kuhn, 2011. "Financial incentives, the timing of births, birth complications, and newborns' health: Evidence from the abolition of Austria's baby bonus," ECON - Working Papers 048, Department of Economics - University of Zurich.
    8. Svetlana Biryukova & Oxana Sinyavskaya & Irina Nurimanova, 2016. "Estimating effects of 2007 family policy changes on probability of second and subsequent births in Russia," HSE Working papers WP BRP 68/SOC/2016, National Research University Higher School of Economics.
    9. Ross Guest & Nick Parr, 2010. "The Effects of Family Benefits on Childbearing Decisions: A Household Optimising Approach Applied to Australia," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 609-619, December.
    10. 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.
    11. Nick Parr, 2011. "The contribution of increases in family benefits to Australia’s early 21st-century fertility increase: An empirical analysis," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 25(6), pages 215-244.
    12. Gaitz, Jason & Schurer, Stefanie, 2017. "Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation," IZA Discussion Papers 10525, Institute of Labor Economics (IZA).
    13. Beatrice Brunner & Andreas Kuhn, 2014. "Announcement effects of health policy reforms: evidence from the abolition of Austria’s baby bonus," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 373-388, May.
    14. Gordey Yastrebov, 2016. "Intergenerational Social Mobility in Soviet and Post-Soviet Russia," HSE Working papers WP BRP 69/SOC/2016, National Research University Higher School of Economics.
    15. Mikko Myrskylä & Rachel Margolis, 2013. "Parental benefits improve parental well-being: evidence from a 2007 policy change in Germany," MPIDR Working Papers WP-2013-010, Max Planck Institute for Demographic Research, Rostock, Germany.
    16. de Gendre, Alexandra & Lynch, John & Meunier, Aurélie & Pilkington, Rhiannon & Schurer, Stefanie, 2021. "Child Health and Parental Responses to an Unconditional Cash Transfer at Birth," IZA Discussion Papers 14693, Institute of Labor Economics (IZA).
    17. Isabella Buber-Ennser & Ralina Panova & Jürgen Dorbritz, 2013. "Fertility Intentions Of University Graduates," Demográfia English Edition, Hungarian Demographic Research Institute, vol. 56(5), pages 5-34.
    18. Brunner, Beatrice & Kuhn, Andreas, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns' Health: Evidence from the Abolition of Austria's Baby Bonus," IZA Discussion Papers 6141, Institute of Labor Economics (IZA).

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