Did Australia’s Baby Bonus Increase Fertility Intentions and Births?

Abstract

In May 2004, the Australian government announced a “Baby Bonus” policy, paying women an initial A$3,000 per new child. We use household panel data from the Household, Income and Labour Dynamics in Australia Survey (N = 14,932) and a simultaneous equations approach to analyze the effects of this bonus on fertility intentions and ultimately births. The results indicate that opportunity costs influence intentions and births in predictable ways. Fertility intentions rose after the announcement of the Baby Bonus, and the birth rate is estimated to have risen modestly as a result. The marginal cost to the government for an additional birth is estimated to be at least A$126,000.

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Acknowledgments

This paper makes use of unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Survey project was initiated, and is funded, by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs, and is managed by the Melbourne Institute of Applied Economic and Social Research. The findings and views reported in this paper, however, are those of the authors, and should not be attributed to either of these organisations.

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Correspondence to Robert Drago.

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Drago, R., Sawyer, K., Shreffler, K.M. et al. Did Australia’s Baby Bonus Increase Fertility Intentions and Births?. Popul Res Policy Rev 30, 381–397 (2011). https://doi.org/10.1007/s11113-010-9193-y

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Keywords

  • Baby Bonus
  • Births
  • Fertility
  • HILDA Survey