Does Pro-Natalist Cash Transfer Work? Evidence from Local Programs in South Korea.

PWP-CCPR-2017-009

Abstract

Updated Title: Pro-Natalist Cash Transfers, Fertility, and Missing Women

This paper estimates the effects of pro-natalist cash transfers (baby bonus) on birth outcomes. I exploit rich spatial and temporal variation in these cash transfers and administrative data on the universe of births and deaths in South Korea. The total fertility rate in 2015 would have been 3% lower without the cash transfers. The cash-transfer elasticities of birth rates vary widely across birth order and mother’s age. These financial incentives encouraged working mothers to have second and third children. I observe a decrease in gestational age among these working mothers, which in turn led to an overall reduction in birth weight. There is no evidence of changes in early life mortality, but the cash transfers shifted the male-skewed sex ratio towards its natural level.