Skip to content

Research Paper Warwick Economic Research Papers 851

Fertility response to financial incentives: evidence from the Working Families Tax Credit in the UK

Authors

Publication date

2008

Abstract

The introduction of the 1999 Working Families Tax Credit (WFTC) in the UK encouraged low income families with children to enter the labor market. The tax credit, however, may have had the unintended side effect of increasing the childbearing of these households. While many studies have looked at the importance of WFTC on the female labor supply, only few have estimated the impact it had on fertility decisions of British families. This paper employs the 1995 to 2003 British Household Panel Survey and identifies the policy impact of WFTC by observing the change in the probability of birth as well as the timing of birth using the difference in differences estimator. The main findings of this paper suggest that single women responded to the policy introduction by reducing the probability of birth and prolonging the birth intervals across all birth parity. For women with partners, on the other hand, the estimates indicate that financial incentives did not encourage them to enter motherhood but it rather induced women to have their second birth quicker.

Subjects

Labour Market, Childbearing: Fertility, Welfare Benefits, and Social Policy

Links

http://ideas.repec.org/p/wrk/warwec/851.html

Notes

working paper

#511580


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest