IDENTIFYING THE RESPONSE OF FERTILITY TO FINANCIAL INCENTIVES
Version of Record online: 17 JUN 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Journal of Applied Econometrics
Volume 29, Issue 2, pages 314–332, March 2014
How to Cite
Laroque, G. and Salanié, B. (2014), IDENTIFYING THE RESPONSE OF FERTILITY TO FINANCIAL INCENTIVES. J. Appl. Econ., 29: 314–332. doi: 10.1002/jae.2332
- Issue online: 7 MAR 2014
- Version of Record online: 17 JUN 2013
- Manuscript Revised: 26 NOV 2012
- Manuscript Received: 21 MAR 2010
While using financial incentives to increase fertility has become relatively common, the effects of such policies are difficult to assess. We propose an identification strategy that relies on the fact that the variation in wages induces variation in benefits and tax credits among ‘comparable’ households. We implement our approach by estimating a discrete-choice model of female participation and fertility using individual data from the French Labor Force Survey and a detailed representation of the French tax–benefit system. Our results suggest that financial incentives have had a significant effect on fertility decisions in France. As an example, we simulate the effects of an additional, unconditional child credit of 150 euros per month. The effects are strongest for the third child. Copyright © 2013 John Wiley & Sons, Ltd.