Did Australia's Baby Bonus Increase the Fertility Rate?

Robert Drago, Katina Sawyer, Karina Shreffler (), Diana Warren and Mark Wooden
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Robert Drago: Pennsylvania State University, USA
Katina Sawyer: Pennsylvania State University, USA

Melbourne Institute Working Paper Series from 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.

Pages: 30 pages
Date: 2009-02
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Citations: View citations in EconPapers (19)

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