Baby Bonus, Fertility, and Missing Women

from Health Economics at on November 2, 2020 at 08:34PM

This paper estimates the effects of pro-natalist cash transfers (baby bonus) on birth outcomes. I exploit rich spatial and temporal variation in these cash transfers and administrative data on the universe of birth and death registry records in South Korea. I find that the pro-natalist cash transfers increased the number of children ever born by women. The total fertility rate in 2015 would have been 3% lower without the cash transfers. The elasticities of birth rates with respect to cash transfers vary widely across birth order and mother’s age. These financial incentives encouraged working mothers to have second and third children. I observe a decrease in gestational age among these working mothers, which in turn led to an overall reduction in birth weight. There is no evidence of changes in early life mortality, but the cash transfers shifted the male-skewed sex ratio towards its natural level.