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Centre for Market and Public Organisation

. The project. Falling total fertility rates sparking interest in pro-natalist policies (France, Italy, Japan, Germany)Phase 1: Understanding trends in fertility in the UKWhat have been the main changes in fertility behaviour?(How) Do these trends vary by education?Phase 2: The impact of welfare reform on fertilityNew Labour substantially increased financial help for families (working families tax credit, means-tested benefits)Does fertility respond to financial incentives?.

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Centre for Market and Public Organisation

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    5. Fertility and Education Women with higher education levels have lower fertility Have smaller families (conditional on motherhood) Remain childless Delay motherhood However rise in participation in education accounts for half of overall decline in fertility. Fertility is falling over time within education groups. Increasing polarisation of outcomes: Hawkes et al (2004) show that older mothers less likely to live in poverty.

    6. The impact of welfare reform on fertility New Labour substantially increased financial help for (low-income) families Working Families Tax Credit (October 1999) Increased means-tested child benefits “Demand” for children “Price” of children falls => positive effect Income increases => positive/negative effect Employment incentives affect the cost of time spent away from work => negative effect Couples No issues of partnership formation No/negative employment incentives

    7. Changed in child-contingent payments to couples Ł per week, 2006 prices

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    11. Birth probabilities

    12. Regression Model

    13. Main results (OLS)

    14. Some other results No differential response by age of woman Women at different stages in life-cycle have similar responses to fertility incentives Robustness Analysis Positive fertility effect with narrower window No effect found using spurious reforms Quantity/Tempo? Preliminary analysis on the age at first birth for treated group suggests no change age at first birth

    15. Some conclusions Evidence suggests increase in fertility of women in low education/ earnings groups, consistent with impact of welfare reform Estimated increase in annual birth probability of 0.7 – 0.8 percentage points for women in couples in low_ed group would imply around 11,000 – 12,500 additional births a year (total births in 2005 = 645,000)

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