Evaluating How Child Allowances and Daycare Subsidies Affect Fertility

86 Pages Posted: 23 Feb 2017 Last revised: 11 Jan 2018

See all articles by Joshua Goldstein

Joshua Goldstein

University of California, Berkeley

Christos Koulovatianos

Department of Finance, University of Luxembourg

Jian Li

Universite du Luxembourg

Carsten Schröder

Free University of Berlin (FUB) - Department of Business and Economics

Date Written: January 31, 2017

Abstract

We compare the cost effectiveness of two pronatalist policies:

(a) child allowances; and

(b) daycare subsidies.

We pay special attention to estimating how intended fertility (fertility before children are born) responds to these policies. We use two evaluation tools:

(i) a dynamic model on fertility, labor supply, outsourced childcare time, parental time, asset accumulation and consumption; and

(ii) randomized vignette-survey policy experiments.

We implement both tools in the United States and Germany, finding consistent evidence that daycare subsidies are more cost effective. Nevertheless, the required public expenditure to increase fertility to the replacement level might be viewed as prohibitively high.

Keywords: Childcare, fertility, labor supply, vignette survey method, public policy

JEL Classification: J13, J18, J38, D91, C83, D10, C38

Suggested Citation

Goldstein, Joshua and Koulovatianos, Christos and Li, Jian and Schröder, Carsten, Evaluating How Child Allowances and Daycare Subsidies Affect Fertility (January 31, 2017). CFS Working Paper, No. 568. Available at SSRN: https://ssrn.com/abstract=2918877

Joshua Goldstein

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Christos Koulovatianos (Contact Author)

Department of Finance, University of Luxembourg ( email )

4 Rue Albert Borschette
Luxembourg, L-1246
Luxembourg

Jian Li

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Carsten Schröder

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany
+49 030 838-52259 (Phone)
+49 030 838-52560 (Fax)

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