Journal of Population Economics

, Volume 25, Issue 1, pp 245–266

Does welfare reform affect fertility? Evidence from the UK

Original Paper

Abstract

This paper provides evidence on the effect of welfare reform on fertility, focusing on UK reforms in 1999 that increased per-child spending by 50% in real terms. We use a difference-in-differences approach, exploiting the fact that the reforms were targeted at low-income households. The reforms were likely to differentially affect the fertility of women in couples and single women because of the opportunity cost effects of the welfare-to-work element. We find no increase in births among single women, but evidence to support an increase in births (by around 15%) among coupled women.

Keywords

Welfare reform Fertility 

JEL Classification

J13 J18 H53 

References

  1. Adam S and BrewerM(2004) Supporting families: the financial costs and benefits of children since 1975. The Policy Press, BristolGoogle Scholar
  2. Angrist JD, Krueger AB (1999) Empirical strategies in labor economics. In: Ashenfelter O, Card D (eds) Handbook of labor economics, vol 3. Elsevier, Amsterdam, pp 1277–1365CrossRefGoogle Scholar
  3. Angrist JD, Pischke J (2009) Mostly harmless econometrics: an empiricist’s companion. Princeton University Press, PrincetonGoogle Scholar
  4. Ashenfelter OC (1978) Estimating the effect of training programs on earnings. Rev Econ Stat 60:47–57CrossRefGoogle Scholar
  5. Baughman R, Dickert-Conlin S (2003) Did expanding the EITC promote motherhood? Am Econ Rev Papers Proc 93(2):247–250CrossRefGoogle Scholar
  6. Becker GS (1991) A treatise on the family. Enlarged edition, Harvard University Press, CambridgeGoogle Scholar
  7. Berrington A (2004) Perpetual postponers? Women’s, men’s and couple’s fertility intentions and subsequent fertility behaviour. Popul Trends 117:9–19Google Scholar
  8. Bertrand M, Duflo E, Mullainathan S (2004) How much should we trust difference-in-differences? Q J Econ 119(1):249–275CrossRefGoogle Scholar
  9. Blundell R, Costa-Dias M (2002) Alternative approaches to evaluation in empirical economics. Portuguese Econ J 1(2):91–115CrossRefGoogle Scholar
  10. Blundell R, Brewer M, Shepard A (2005) Evaluating the labour market impact of the working families’ tax credit using difference in differences. HM revenue and customs working paper 4Google Scholar
  11. Blundell R, Duncan A, McCrae J, Meghir C (2000) The labour market impact of the Working Family Tax Credit. Fisc Stud 21(1):75–103CrossRefGoogle Scholar
  12. Brewer M (2001) Comparing in-work benefits and the reward to work for families with children in the US and the UK. Fisc Stud 22(1): 41–77CrossRefGoogle Scholar
  13. Brewer M (2003) The new tax credits. IFS Briefing Note BN35. Institute for Fiscal Studies, LondonGoogle Scholar
  14. Brewer M, Browne J (2006) The effect of the working families’ tax credit on labour market participation. IFS briefing note 69. Institute for Fiscal Studies, LondonGoogle Scholar
  15. Brewer M, Duncan A, Shephard A, Suarez MJ (2006) Did working families’ tax credit work? The impact of in-work support on labour supply in Great Britain. Labour Econ 13(6):699–720CrossRefGoogle Scholar
  16. Ellwood DT (2000) The impact of the earned income tax credit and social policy reforms on work, marriage, and living arrangements. Natl Tax J 53(4):1063–1106Google Scholar
  17. Ermisch J (1988) Econometric analysis of birth rate dynamics in Britain. J Hum Resour 23(4):563–576CrossRefGoogle Scholar
  18. Francesconi M, van der Klaauw W (2007) The socioeconomic consequences of in-work benefit reform for British lone mothers. J Hum Resour 42(1):1–31Google Scholar
  19. Fraser CD (2001) Income risk, the tax-benefit system and the demand for children. Economica 68(269):105–125CrossRefGoogle Scholar
  20. Gregg P, Harkness S (2003) Welfare reform and lone parents employment in the UK. CMPO working paper series 03/072, University of BristolGoogle Scholar
  21. Gregg P, Harkness S, Smith S (2009) Welfare reform and lone parents. Econ J 119(535):F38–F65CrossRefGoogle Scholar
  22. Hills J, Waldfogel J (2004) A ‘Third Way’ in welfare reform: what are the lessons for the US? J Policy Anal Manage 23(4):765–788CrossRefGoogle Scholar
  23. Hoynes H (1997) Does welfare play any role in female headship decisions? J Public Econ 65(1997):89–118Google Scholar
  24. Laroque G, Salanie B (2005) Fertility and financial incentives in France. CESifo Econ Stud 50(3):423–450CrossRefGoogle Scholar
  25. Laroque G, Salanie B (2008) Does fertility respond to financial incentives? CESifo working paper 2339Google Scholar
  26. Leigh A (2007) Earned income tax credits and labor supply: evidence from a British Natural Experiment. Natl Tax J 60(2):205–224Google Scholar
  27. Levine PB (2002) The impact of social policy and economic activity throughout the fertility decision tree. National Bureau of Economic Research working paper 9021Google Scholar
  28. McKay S (2000) Low/moderate-income families in Britain: work, working families’ tax credit and childcare in 2000. Department for Work and Pensions research report 161, LondonGoogle Scholar
  29. McKay S (2001) Working families’ tax credit in 2001. Department for Work and Pensions research report 205, LondonGoogle Scholar
  30. Milligan K (2005) Subsidizing the stork: new evidence on tax incentives and fertility. Rev Econ Stat 87(3):539–555CrossRefGoogle Scholar
  31. Moffitt R (1998) The effect of welfare on marriage and fertility. In: Moffitt R (ed) Welfare, the family and reproductive behaviour: research perspectives. National Academy, Washington, pp 50–97Google Scholar
  32. Moulton B (1990) An illustration of a pitfall in estimating the effects of aggregate variables on micro units. Rev Econ Stat 72(2):334–338CrossRefGoogle Scholar
  33. Murphy M, Berrington A (1993) Constructing period parity progression ratios from household survey data. In: Bhrolchain MN (ed) New perspectives on fertility in Britain. HMSO, London pp 17–32Google Scholar
  34. Whittington LA (1992) Taxes and the family: the impact of the tax exemption for dependents on marital fertility. Demography 29(2):215–226CrossRefGoogle Scholar
  35. Whittington LA, Alm J, Peters HE (1990) Fertility and the personal exemption: implicit pronatalist policy in the United States. Am Econ Rev 80(3):545–556Google Scholar

Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.Institute for Fiscal StudiesLondonUK
  2. 2.Centre for Market and Public OrganisationUniversity of BristolBristolUK

Personalised recommendations