The impact of family policy expenditure on fertility in western Europe

This article analyzes the impact on fertility of changes in national expenditure for family allowances, maternity- and parental-leave benefits, and childcare subsidies. To do so, I estimate a model for the timing of births using individual-level data from 16 western European countries, supplemented with data on national social expenditure for different family policy programs. The latter allow approximation of the subsidies that households with children receive from such programs. The results show that increased expenditure on family policy programs that help women to combine family and employment--and thus reduce the opportunity cost of children--generates positive fertility responses.