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IDENTIFYING THE RESPONSE OF FERTILITY TO FINANCIAL INCENTIVES
Author(s) -
Laroque Guy,
Salanié Bernard
Publication year - 2014
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.2332
Subject(s) - euros , fertility , incentive , economics , representation (politics) , variation (astronomy) , tax credit , identification (biology) , survey data collection , demographic economics , labour economics , public economics , microeconomics , demography , population , philosophy , physics , botany , sociology , politics , humanities , political science , astrophysics , law , biology , statistics , mathematics
SUMMARY 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.