Effects of Welfare Benefits on Subsequent Fertility and Maternal Labour Supply Choices
34 Pages Posted: 12 Sep 2024
Date Written: September 10, 2024
Abstract
This paper studies the causal effects of welfare benefits supporting unemployed mothers in low-income households with low-birth-weight newborns on their subsequent fertility and transition into employment. I exploit the discontinuities in the eligibility criteria that entitle parents of newborns with birth weights below certain thresholds, to receive income support to devote themselves to the care of their at-risk newborn child. Using Spanish birth register data, I find that these welfare benefits impacted the intensive margin of the fertility decision and reduced the time to the next delivery. Unemployed mothers in low-SES households who have a newborn with a birth weight right below 1,100 grams are, on average, 6 percentage points (19 per cent) more likely to have a subsequent child compared to similar mothers with newborns right above that threshold and do so 10 months faster. This effect is mostly coming from young mothers. Unemployed mothers with an eligible newborn are also found to be 16 percentage points (27 per cent) more likely to transition to unemployment at the time of their subsequent birth.
Keywords: Income support, Fertility, maternal labor supply, time to subsequent birth
JEL Classification: J18, I38, J13
Suggested Citation: Suggested Citation