Financial Incentives and Fertility Choices: Evidence from India

Abstract

This article estimates the impact of a maternity cash transfer programme, Indira Gandhi Matritva Sahyog Yojana, implemented in India since 2011, on fertility choices. Since the scheme restricts the benefits to the first two births, we ask whether there is an impact on the likelihood of birth post implementation and if this behaviour is driven by son preference. We also test whether the scheme has affected the likelihood of female births. Our results give evidence in support of ‘stopping rule’ and we find that treated households reduce births only when their first two births are sons. However, we do not find any statistically significant impact of the likelihood of a female birth. We further find that post the implementation of the scheme, mothers and children are less likely to get better care for higher order births. JEL Codes: J13, J18