Pro-natalist Cash Grants and Fertility: A Panel Analysis

Abstract

By exploiting variations in pro-natalist cash grant amounts across 225 municipal districts in South Korea from 2005 to 2010, we estimated the causal impact of cash grants on fertility. After controlling for administrative district fixed effects, a system GMM analysis revealed a rise in grant amounts by 1,000 USD increased the crude birth rate by 4.4%. The results imply that the required grant amount for one extra birth increases with the parity of births. The sub-group analysis by maternal age suggests that the grant may have a significant permanent impact on the completed lifetime fertility.