The Impact of Family Policy Expenditure on Fertility in Western Europe

Abstract

This paper analyzes the impact on fertility of changes in national expenditure for family allowances, maternity and parental leave benefits, and childcare subsidies. To do so, I estimate a model for the timing of births using individual-level data from 16 Western European countries supplemented with data on national social expenditure for different family policy programs. These latter allow approximation of the subsidies that households with children receive from such programs. The results show that increased expenditure on family policy programs that facilitate women to combine family and employment — and thus reduce the opportunity cost of children — generates positive fertility responses.

Keywords: Duration analysis, public policy, fertility

JEL Classification: C41, H5, J13