Public policies and low fertility - theoretical considerations

Although Korea has successfully experienced a demographic transition, its super-low fertility (1.08 in 2005) has become its serious public issue. To encourage couples to have additional children, since 2003 district-level local governments have begun providing financial incentives (FIN) to the parents who have registered the birth of their child with their local government, with FIN generally higher for children of second or higher order births. The objective of this study is to assess the effects of these FIN programs on the household decision to have an additional child. We used four datasets: 1) data for FIN programs of local governments for the birth registration; 2) birth registry data over 1999-2009; 3) district-level resident registration statistics; and 4) Census data for 2005. The method of this study is panel time-series analysis. Having any FIN increases the crude rate of 2nd-order births by 2.92% (p<0.01) and 3rd-order births by 8.45% (p<0.01). A FIN of one million Korean Won (US$887) is significantly associated with a 3.0% (p<0.01) increase in crude rate of second or higher order births, and is also associated with 2.3% (p<0.01) increase in crude rate of third or higher order births. This study suggests that FIN programs for the birth registration was effective in encouraging parents who have a second or more child.

This paper studies the effect on fertility of a series of three regional reforms, implemented 1988-1990, that changed the budget constraints of families in the northernmost parts of Norway compared to similar families in the rest of the country. The quasi-experimental nature of this policy change allows us to examine how exogenous variation in disposable income and the cost of childbearing affects fertility rates. In other words, we will compare the difference in fertility-related outcomes before and after the policy change (reform) in the affected regions with the same outcomes before and after 1989 for unaffected regions of the country. Individual-level multivariate analysis suggests that the reform did not have a causal effect on fertility.

Postponement of parenthood contributed heavily to the emergence of subreplacement fertility in Europe in the 1980s and 1990s. Recuperation of fertility has gained importance in determining period fertility levels and is associated with policies that reduce the opportunity costs of fertility and support dual earners in combining work and family. We use data from the European Social Survey to assess the impact of economic and policy contexts on first birth hazards of men and women in 14 EU countries between 1970 and 2005. Using multilevel discrete-time hazard models, we focus on differential effects of these contextual factors by age, gender and socio-economic position. Results show that adverse economic conditions significantly reduce first birth hazards of both men and women below age 30, with effect being more pronounced among the higher educated. After age 30, family policies contribute to the recuperation of fertility but the effects vary by socio-economic groups.

This paper, among the first, dynamically estimates the effects of China’s family planning policy on fertility with a micro-level panel data, transformed from the cross-sectional birth history data of the China Health and Nutrition Survey. This paper applies a mixed proportional hazard duration model where the unobserved individual heterogeneity is non-parametrically specified, recommended by Heckman and Singer (1984), and extends the improved policy measures from Wang (2012)’s static analysis to dynamic analysis. It’s found that, the one-child policy, the most recent and ongoing period of China’s policies, has remarkably negative effects on the probabilities of having the second and third child, but shows little impact for other birth orders. The effects of earlier periods of policies are simply trivial through all birth orders. Therefore, family planning policies didn’t play a major role in China’s fertility transition which mainly happened before the one-child policy period. Further, a more-educated woman tends to respond to policy shocks at lower birth orders in contrast to a less-educated woman, because the former desires a smaller family. Moreover, the model without heterogeneity would strikingly overestimate the policy effects and a parametric heterogeneity might also bias the estimation.