The Impact of Family Policies on Fertility Trends in Developed Countries

We examine how strongly fertility trends respond to family policies in OECD countries. In the light of the recent fertility rebound observed in several OECD countries, we empirically test the impact of different family policy instruments on fertility, using macro panel data from 18 OECD countries that spans the years 1982-2007. Our results confirm that each instrument of the family policy package (paid leave, childcare services and financial transfers) has a positive influence on average, suggesting that the combination of these forms of support for working parents during their children's early years is likely to facilitate parents' choice to have children. Policy levers do not all have the same weight, however: in-cash benefits covering childhood after the year of childbirth and the provision of childcare services for children under age three have a larger potential influence on fertility than leave entitlements and benefits granted around childbirth. Moreover, we find that the influence of each policy measure varies across different family policy contexts. Our findings are robust after controlling for birth postponement, endogeneity, time-lagged fertility reactions and for different aspects of national contexts, such as female labour market participation, unemployment, labour market protection and the proportion of children born out of marriage.