Cats, Dogs, and Babies: Quasi-Experimental Evidence on Substitutes or Complements from Linked Administrative Records

Kuan-Ming Chen, Ming-Jen Lin, Hau-Hung Yang and Shirley Yen

No 26278, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: Falling fertility is one of the most pressing demographic and economic challenges, particularly in East Asia. Among the many popular explanations, pets are often portrayed as substitutes for children. By linking Taiwan's universe of pet registry records with administrative tax files, we construct a ten-year panel covering 23 million individuals and millions of registered cats and dogs and provide the first large-scale empirical analysis examining the relationship between pet ownership and childbearing. We first document descriptive patterns that both dog and cat ownership are rising rapidly while births decline, and in the cross-section dog ownership is positively correlated with having children-even after controlling for family background, income, assets, and home ownership-while cat ownership is negatively correlated. Second, we estimate cross-price elasticities of demand. Exploiting the staggered rollout of childbirth bonuses, we find that new pet acquisitions increase significantly in the year after a bonus is introduced. Combining this response with income elasticities we estimate from Taiwan's receipt lottery and with measured expenditure shares through Slutsky symmetry, we recover the policy-relevant elasticity of child demand with respect to the cost of pets is −0.20. This indicates that children and pets are net complements. Third, event studies show that timing and life stage matter: childbearing rises markedly after pet adoption-concentrated among those without prior children-consistent with a ``starter family'' mechanism, yet childbirth is followed by fewer pet acquisitions. Pet acquisition also rises after later-life events such as divorce or the death of a spouse or child.

Keywords: Fertility; Pet Ownership; Pro-natalist Policies (search for similar items in EconPapers)
JEL-codes: J12 J13 J18 (search for similar items in EconPapers)
Date: 2026-10
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