Short-Run and Long-Run Effects of Sizable Child Subsidy: Evidence from Russia

Ilia Sorvachev and Evgeny Yakovlev
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Ilia Sorvachev: Department of Economics, University of Wisconsin-Madison

No w0254, Working Papers from New Economic School (NES)

Abstract: This paper utilizes a large-scale natural experiment aimed to increase fertility in Russia. Motivated by a decade-long decrease in fertility and population, the Russian government introduced a sequence of sizable child subsidies (called Maternity Capitals) in 2007 and 2012. We find that the Maternity Capital resulted in a significant increase in fertility both in the short run (by 8%) and in the long run (by 20%), and has already resulted in an increase in completed cohort fertility for a large cohort of Russian women. The subsidy is conditional and can be used mainly to buy housing. We find that fertility grew faster in regions with a shortage of housing and with a higher ratio of subsidy to housing prices. We also find that the subsidy has a substantial general equilibrium effect. It affected the housing market and family stability. Finally, we show that this government intervention comes at substantial costs: the government’s willingness to pay for an additional birth induced by the program equals approximately 50,000 dollars.

Pages: 58 pages
Date: 2019-07-08
New Economics Papers: this item is included in nep-cis, nep-gro and nep-tra
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https://www.nes.ru/files/Preprints-resh/WP254.pdf (application/pdf)

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Working Paper: Short-Run and Long-Run Effects of Sizable Child Subsidy: Evidence from Russia (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:abo:neswpt:w0254

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