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A re-appraisal of the fertility response to the Australian baby bonus
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Abstract
The Australian baby bonus offering parents 3,000onthebirthofanewchildwasannouncedonMay112004.Theavailabilityoffiveyearsofbirthdatafollowingtheintroductionofthebabybonusallowsforamorecomprehensiveanalysisofthepolicyimplicationsthaniscurrentintheliterature.ThefocusofthispaperistoidentifyifthereisapositivefertilitychoiceresponsetotheintroductionoftheAustralianbabybonuspolicyandifthisresponseissustainedovertime.Todothis19yearsofbirthandmacroeconomicdata,beginning1990,isanalysedusinganunobservablecomponentsmodel.Theresultsindicateasignificantincreaseinbirthnumberstenmonthsfollowingtheannouncementofthebabybonus,andthisoverallincreasewassustaineduptotheendoftheobservedperiod.AcumulativegrowthinbirthnumberswhichcommencedinJanuary2006slowsin2008and2009.Itissuggestedthattheinitialincreaseinbirths,identifiedinMarch2005,isadirectfertilityresponsetotheintroductionofthepolicyandthatthesubsequentchangeinthegrowthofbirthnumbersmaybetheresultofadelayedeffectworkingthroughanumberofchannels.Itisestimatedthatapproximately119,000birthsareattributabletothebabybonusovertheperiod,atanapproximatecostof39000 per extra child.Fertility Rate, Time Series, baby bonus