Abstract
In a period of very low fertility, effective family and childcare support policy measures are needed. From a wide range of instruments available to government intervention, we focus on public expenditures effects on short-term fertility. Using a sample of 28 European countries in a panel framework, we found that there is a small positive elasticity of crude birth rate to cash benefits related to childbirth and childrearing provided through social security system. Different public services provided to ease the burden of parents and all other benefits in kind, means or non-means tested, are found to be insignificant. These results are robust to alternative methods of estimation. Controlling for country heterogeneity by religion and by culture, some particularly interesting differences in birth rate determinants were highlighted as well.
Highlights
Summary: In a period of very low fertility, effective family and childcare support policy measures are needed
Given the diversity of public expenditure for family and childcare support, three independent variables of interest where compiled aggregating similar instruments of public pro-natalists policies: all cash benefits related to childbirth and childrearing (CASH), all public services provided to ease the burden of parents (SERVICES) and all other benefits in kind, means or nonmeans tested (INKIND)
In order to capture the marginal effect of different types of family and childcare support public expenditures on crude birth rate, three control variables were included into the empirical model: gross domestic product per capita (GDPPC), crude marriage rate (CMR), and unemployment rate (UR)
Summary
At the core of the assumed relationship between family and childcare policies and childbirth decisions stands the neoclassic economic theory of fertility. Bruce Chapman et al (1999) argued that indirect costs are more significant than direct costs in determining whether the first birth decision, while direct costs are more significant in decision-making about later children Summarizing, policies such as child and family cash allowances, tax relief for children, subsidies to childcare, and maternity and parental leave benefits are all expected to have a positive effect on fertility by reducing the direct or indirect (opportunity) cost of children or by increasing individuals’ income. This assumption is confirmed by the empirical studies realized so far, even if they find a positive but weak relationship between family and child care public expenditure and fertility. In the case of Switzerland, Giuliano Bonoly (2008) highlighted the importance of childcare, and of the level of family benefits as determinants of fertility rates
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