The demographic impact of family benefits: evidence from a micro-model and from macro-data.
The authors present two ways to evaluate the impact of family allowances upon fertility. The first approach consists of an a priori evaluation derived from a small micro-model of fertility behavior. The model describes how people plan the successive births of their children, giving particular attention to the aggregation of individual decisions in determining the total level of fertility and its changes in response to changes in family policy. The macro-implications of this first model are then empirically tested in the second part of the paper by analyzing fertility and family benefits across OECD countries since the early 1970s. This is accomplished by deriving from the first model an aggregate econometric model whose main explanatory variable is female wages. An index of family benefits is then introduced and tested as a complementary variable. It is demonstrated that the empirical relationship between fertility and family allowances shown by the second approach agrees with the a priori evaluations of the first part, suggesting a moderate but not insignificant impact of family policy upon demographic behavior.