Abstract
Armenia experienced dramatic demographic changes in the past three decades: the share of adults age 65 and over nearly doubled, the total fertility rate reduced by more than 30 percent, and the male-to-female sex ratio at birth increased to one of the world’s highest. Like other middle-income countries concerned with the implications of an aging population for long-term growth and fiscal sustainability, Armenia introduced financial incentives to promote fertility. This paper estimates the effect of the 2009 reform of the universal Childbirth Benefit Program, which increased the amounts of lump sum transfers conditional on birth. The analysis relies on a quasi-experimental strategy exploiting the timing of the policy change and eligibility rule – women get a larger transfer for third and higher-order births. The findings show that the annual probability of an additional birth among women with at least two other children increased between 1.4 and 1.6 percentage points in the five years following the policy change. These effects are equivalent to 58 and 64 percent of the pre-reform birth probability for women who had at least two children. Given the previously demonstrated relationship between fertility level and sex ratio in societies with strong son preference, the reform may potentially alleviate the sex imbalance without directly targeting it. Parents who already have at least one son and are less likely to engage in sex selection and more likely to have additional births; however, the findings do not indicate a significant increase in the likelihood of having daughters.
Highlights
The share of adults aged 65 and above in Armenia has almost doubled from 5.6% in 1990 to 11.5% in 2019.1 As in other middle-income countries, the aging of the population raises concerns about productive capacity and fiscal sustainability, especially with respect to pension and health care systems
3.2 Identification strategy To identify the impact of the childbirth grants on fertility outcomes, we rely on the variation in transfer amounts based on the timing of the unexpected policy change and on the number of children women had in each year since the amount of the benefit differed by birth rank
We find that the 2009 reform of the Armenia Childbirth Grant program, which substantially increased the transfer amount provided for third and higher order births, increased fertility in women eligible for the largest transfers
Summary
The share of adults aged 65 and above in Armenia has almost doubled from 5.6% in 1990 to 11.5% in 2019.1 As in other middle-income countries, the aging of the population raises concerns about productive capacity and fiscal sustainability, especially with respect to pension and health care systems. We estimate the impact of the 2009 reform of the Armenia Childbirth Benefit Program on births by women with at least two children in the five years following the policy change.. The increased fertility by this group is likely to reduce the sex imbalance There is no such impact for women who already had two or more girls (that is, no sons), who are anyway likely to have additional births even without incentivization due to son preference. Between these two groups of women (those with any son and those with none), there are similar impacts of the policy reform on the likelihoods of having additional sons and daughters These results imply that the sex balance among the additional births caused by the policy change would diminish the male-female sex ratio at birth.
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