Baby Bonus, Fertility, and Missing Women

PWP-CCPR-2020-008

Abstract

This paper presents novel causal evidence on the effects of pro-natalist financial incentives on
babies. I exploit rich spatial and temporal variation in the generosity of cash transfers provided
to families with newborn babies and the universe of birth, death, and migrant registry records
in South Korea. I find that the total fertility rate in 2015 would have been 3% lower without
the cash transfers. These cash transfers were particularly effective among working mothers
and encouraged them to have second and third children. This selection of working mothers into
childbearing led to a decrease in gestational age, which in turn led to an overall reduction in birth
weight, but no change in early mortality. The cash transfers had an unintended consequence of
correcting the unnaturally male-skewed sex ratio closer to its natural level.