Fertility response to financial incentives evidence from the Working Families Tax Credit in the UK
Ohinata, Asako (2008) Fertility response to financial incentives evidence from the Working Families Tax Credit in the UK. Working Paper. University of Warwick, Department of Economics, Coventry.
WRAP_Ohinata_twerp_851.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
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.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HV Social pathology. Social and public welfare|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Working Families (Organization : Great Britain), British Household Panel Survey, Welfare economics, Fertility, Human -- Economic aspects -- Great Britain, Great Britain -- Economic policy -- 1979-1997, Great Britain -- Economic policy -- 1997-|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Date:||15 April 2008|
|Number of Pages:||36|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|References:|| Baughman, R. and S. Dickert-Conlin (2003): “Did expanding the EITC promote motherhood?”, American Economic Review, Papers and Proceedings, 93(2): pp. 247–251.  Baughman, R. and S. Dickert-Conlin (2006): “The Earned Income Tax Credit and fertility”, forthcoming in Journal of Population Economics.  Becker, G. (1991): “A Treatise on the family”, Cambridge, Harvard University Press.  Bloemen, H. and A.S.Kalwij (2001): “Female labor market transition and the timing of births: A simultaneous analysis of the effects of schooling”, Labour Economics, 8(5): pp. 593-620.  Blossfeldm H.P. and J. Huinink (1991): “Human capital investments or norms of role transition? How women’s schooling and career affect the process of family formation”, The American Journal of Sociology, 97(1): pp.143-168.  Blundell, R. and T. MaCurdy (1999): “Labor supply: A review of alternative approaches”, in O. Ashenfelter and D. Card (eds), Handbook of Labor Economics Vol III, Elsevier North-Holland.  Blundell, R., A. Duncan, J. McCrae, and M. Costas (2000): “The labor market impact of the Working Families’ Tax Credit”, Fiscal Studies, 21(1): pp.75–104.  Blundell, R., M. Brewer and A. Shephard (2005): “Evaluating the labor market impact of Working Families’ Tax Credit using difference-in-differences”, Inland Revenue Working Paper 4.  Brewer, M., A. Duncan, A. Shephard, and M.J. Su´arez (2005): “Did Working Families’ Tax Credit work? The final evaluation of the impact of in-work support on parents’ labor supply and take-up behavior in the UK”, Inland Revenue Working Paper 2.  Brewer, M., A. Ratcliffe, and S. Smith (2007): “Does welfare reform affect fertility? Evidence from the UK”, The Centre for Market and Public Organization Working Paper 07/77.  Browning M. (1992): “Children and household economic behavior”, Journal of Economic Literature 30: pp.1434–1475. Chamberlain, G. (1980): “Analysis of covariance with qualitative data”, Review of Economic Studies, 47: pp.225-238. Reprinted in: G.S. Maddala (1993): The econometrics of panel data. Volume II, Edward Elgar, Aldershot: UK.  Day Care Trust (2003): “Parents need more help from government & employers as childcare bills rocket”, press release.  Dilnot, A. and J. McCrae (2000): “The Family Credit system and the Working Families Tax Credit in the United Kingdom”, OECD Economic Studies, (31): pp.69-84.  Duclos, E., P. Lefebvre, P. Merrigan (2001): “A ‘Natural Experiment’ on the economics of storks: Evidence on the impact of differential family policy on fertility rates in Canada”, Cahier de recherché, Working paper No. 136.  Dyer, W.T. and R.W. Fairlie (2003): “Do Family Caps reduce out-of-wedlock births? Evidence from Arkansas, Georgia Indiana, New Jersey and Virginia”, Economic Growth Centre Yale University, Centre Discussion Paper No.877.  Francesconi, M, and W. Van der Klaauw (2007): “The socioeconomic consequences of ‘In-Work’ benefit reform for British lone mothers”, Journal of Human Resources, 42(1): pp.1–31.  Giles, C. and J. McCrae (1998): “Reforms to in-work transfer payments in the UK”, in C. Lucifora and W. Salverda (eds), Policies for Low Wage Employment and Social Exclusion, Milan: FrancoAngeli.  Grilli,L.(2005): “The random-effects proportional hazards model with grouped survival data: A comparison between the grouped continuous and continuation ration versions”, J.R.Statist. Soc. A , 168(1): pp.83-94.  Greene, W., H. (2003): “Econometric analysis”, 5th edn, the USA: Prentice Hall, Ch. 22.  Hank, K. and M. Kreyenfeld (2003): “A multilevel analysis of child care and women’s fertility decisions in Western Germany”, Journal of Marriage and Family, 65(3): pp.584–596.  Hills, J. and J. Waldfogel (2004): “A ‘Third Way’ in welfare reform: What are the lessons for the US?”, Journal of Policy Analysis and Management, 23(4): pp.765-788.  Horvath, R.A. and H.E. Peters (2000):”Welfare waivers and nonmarital childbearing”, Joint Centre for Poverty Research Working Paper 128.  HM Treasury (1998): “The modernization of Britain’s tax and benefit system number three: The Working Families Tax Credit and work incentives”, Budget report 98.  Jagannathan, R (2003): “New Jersey’s Family Cap and welfare births: An examination of racial differences in fertility within the framework of proximate determinants”, Journal of Urban Affairs, 25(3): pp.357-75.  Jagannathan, R., M.J.Camasso, and M.Killingsworth (2004): “New Jersey’s family cap: Do fertility impacts differ by racial diversity?’, Journal of Labor Economics, 22(2): pp.431-60.  Joyce, T., R.Kaestner, and S. Korenman (2002): “Welfare reform and non-marital fertility in the 1990s: Evidence from birth records”, NBER Working Papers 9406, National Bureau of Economic Research.  Joyce, T., R.Kaestner, S. Korenman and S. Henshaw (2004): “Family cap provisions and changes in births and abortions”, Population Research and Policy Review 23(5-6): pp.435-511.  Jenkins, S.P. (2004): “Survival analysis”, Unpublished manuscript, Institute for Social and Economics  Kaushal, N. and R. Kaestner. (2001): “From welfare to work: Has welfare reform worked?”, Journal of Policy Analysis and Management 20(4): pp.699-719.  Kearney, M. (2004): “Is there an effect of incremental welfare benefits on fertility behavior? A look at the family cap”, Journal of Human Resources, 39(2), pp295-325.  Kravdal, Ø. (1996): “How the local supply of day-care centers influences fertility in Norway: A parity-specific approach”, Population Research and Policy Review,15, pp. 201–218.  Laroque, G. and B. Salanié (2004): “Fertility and financial incentives in France”, CESifo Economic Studies, 50(3): pp.423–450.  Laroque, G. and B. Salanié (2005): “Does fertility respond to financial incentives?”, C.E.P.R.Discussion Papers 5007.  Levine, P.B. and D.J. Zimmerman (1999): “An empirical analysis of the welfare magnet debate”, Journal of Population Economics, 12(3): pp.391-409.  Loury, G. C. (2000): "Preventing subsequent births to welfare recipients", In Preventing Subsequent Births to Welfare Recipients, D. J. Besharov and P. Germanis (eds). College Park, Md.: School of Public Affairs.  Martin, S.P. (2000): “Diverging fertility among U.S. women who delay childbearing past age 30”, Demography, 37(4):pp.523-533.  Milligan, K. (2005):”Subsidizing the stork: New evidence on tax incentives and fertility”, The Review of Economics and Statistics, 87(3): pp.539-555.  Mundlak, Y. (1978): “On the pooling of time series and cross section data”, Econometrica, 46: pp.69-85.  Moffitt (1997): “The effect of welfare on marriage and fertility: What do we know and what do we need to know?”, Institute for Research on Poverty, discussion paper no. 1153-97.  Narendranathan.W., and M.B. Stewart (1993): “How does the benefit effect vary as unemployment spells lengthen?”, Journal of Applied Econometrics, 8(4): pp.361-381.  Nicholls, J. and Simm, C. (2003): “The childcare tax credit element of Working Families’ Tax Credit: a qualitative study”, Inland Revenue Research Report 7.  Paull, G., J. Taylor, and A. Duncan (2002): “Mothers’ employment and childcare use in Britain”, The Institute of Fiscal Studies, London: Bell and Bain ltd.  Ravallion, M. (2001): “The mystery of the vanishing benefits: An introduction to impact evaluation”, The World Bank Economic Review, 15 (1), pp.115-140.  Ryan, S., Manlove, J., and S.L. Hofferth (2006): “State-level welfare policies and nonmarital subsequent childbearing”, Popul Res Policy Rev, 25(1): pp.103-126.  Skirbekk, V., H.P. Kohler, and A. Prskawetz (2004): “Birth-month, school graduation and the timing of births and marriage”, Demography, 41(3):pp.547-568.  Sleebos, J. (2003): “Low fertility in OECD Countries”, OECD Social Employment and Migration 15.  Smallwood, S. (2002): “New estimates of trends in births by birth order in England and Wales”, Population Trends, 108:pp.32–48.  Stewart, M (2004): “The impact of the introduction of the UK minimum wage on the employment probabilities of low wage workers”, Journal of European Economic Association, 2(1), pp. 67-97.  Strickland, P. (1998): “Working Families Tax Credit and Family Credit”, House of Commons Research Paper 98/46.  Sueyoshi, G.T. (1995): “A class of binary response models for grouped duration data”, Journal of Applied Econometrics, 10(4): pp.411-431.  Wooldridge, J. M. (2002): “Econometric analysis of cross section and panel data”, Cambridge MA: The MIT press, pp. 614-642.  Zang, J., Quan.J., P.V. Meerbergen (1994): “The effect on tax-transfer policies on fertility in Canada, 1921-88.”, The Journal of Human Resources, 29(1):pp.181-201.|
Actions (login required)