Monetary Incentives and the Fertility Rate of Female Workers

ABSTRACT

This paper examines empirically the effect of childbirth subsidies on the fertility rate of Japanese households. About one-quarter of Japanese residents join one of the health insurance associations, and more than half of these associations provide childbirth subsidies for the childbirth of primary insured persons and their spouses. Using the panel data of health insurance associations, we estimate the effect of the monetary amount of childbirth subsidies on the rate of the primary insured persons’ (female workers’) fertility, controlling the association-specific, time-invariant unobserved effects. We find that: (i) childbirth subsidies do not raise the fertility of female workers; (ii) the salary affects the fertility of female workers in associations with low average female salary, but not in associations with high average female salary.