Can fiscal policy spur fertility?

Main Article Content

Janusz Kudła
Konrad Walczyk


Research background: The decreasing fertility rate is a serious problem for policymakers as it affects the pension system as well as private consumption and savings. It seems reasonable to analyze whether fiscal policy may mitigate the low birthrate problem.

Purpose of the article: In this paper we strive to answer the question whether fiscal incentives spur fertility if parents are rational.

Methods: A theoretical economic model of utility maximization is applied to analyze the impact of fiscal policy on fertility. The conclusions are based on the analysis of comparative statics simulation calibrated for actual data from Poland.

Findings & Value added: The results indicate that a substantial fertility effect can be obtained by raising subsidies for children or general benefits for families.

Article Details

How to Cite
Kudła, J., & Walczyk, K. (2018). Can fiscal policy spur fertility?. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(2), 167-179.


Angrist, D., Evans, W. N., Rosenzweig, R., & Wolpin, K. I. (1998). Children and their parents’ labor supply: evidence from exogenous variation in family size. American Economic Review, 88(3).
Apps, P., & Rees, R. (2004). Fertility, taxation and family policy. Scandinavian Journal of Economics, 106(4). doi: 10.1111/j.0347-0520.2004.00386.x.
Baughman, R., & Dickert-Conlin, S. (2009). The earned income tax credit and fertility. Journal of Population Economics, 22(3). doi: 10.1007/s00148-007-0177-0.
Becker, G. S. (1960). An economic analysis of fertility. In Demographic and economic change in developed countries. New York: NBER.
Becker, G. S., & Lewis, H. (1973). On the interaction between the quantity and the quality of children. Journal of Political Economy, 81(2). doi: 10.1086/260166.
Becker, G. S., & Tomes, N. (1976). Child endowments and the quantity and quality of children. Journal of Political Economy, 84(4).
Bobrowicz, B. (2007). Alokacja czasu: praca zawodowa i edukacja versus funkcje opiekuńcze i prace domowe. In I. Kotowska (Ed.). Aktywność zawodowa i edukacyjna a obowiązki rodzinne w Polsce. Warsaw: Wydawnictwo Naukowe Scholar.
Boldrin, M., de Nardi, M., & Jones, L. E. (2015). Fertility and social security. Journal of Demographic Economics, 81(3). doi: 10.1017/dem.2014.14.
Cigno, A. (1986). Fertility and the tax benefit system: a reconsideration of the theory of family taxation. Economic Journal, 96(384). doi: 10.2307/2233172.
Cigno, A. (2001). Comparative advantage, observability and the optimal tax treatment of families with children. International Tax and Public Finance, 8(4).
Cigno, A., & Pettini, A. (2002). Taxing family size and subsidizing child-specific commodities? Journal of Public Economics, 85(1). doi: 10.1016/S0047-2727(01)00119-0.
Cremer, H., Dellis, A., & Pestieau, P. (2003). Family size and optimal income taxation. Journal of Population Economics, 16(1). doi: 10.1007/ s001480100113.
Cukrowska-Torzewska, E. (2016). How much does it cost to rear children in Poland? European Journal of Women's Studies, 23(2). doi: 10.1177/ 1350506815586468.
Dilnot, A., & McCrae, J. (2000). The family credit system and the working families tax credit in the United Kingdom. OECD Economic Studies, 31.
Ehrlich, I., & Kim, J. (2005). Social security, demographic trends, and economic growth: theory and evidence from the international experience. NBER Working Paper, 11121.
Espenshade, T. J., Guzman, J. C., & Westoff, C. F. (2003). The surprising global variation in replacement fertility. Population Research and Policy Review. 22(5). doi: 10.1023/B:POPU.0000020882.29684.8e.
Eurostat (2018). Total fertility rate. Retrieved from /tgm/ (03.04.2018).
Van Groezen, B., & Meijdam, L. (2008). Growing old and staying young: population policy in an ageing closed economy. Journal of Population Economics, 21(3). doi: 10.1007/s00148-006-0067-x.
GUS (2017). Budżety gospodarstw domowych w 2016 r. Warsaw.
GUS (2018). Rocznik statystyczny pracy 2017. Warsaw.
Kearney, M. S. (2004). Is there an effect of incremental welfare benefits on fertility behavior? A look at the family cap. Journal of Human Resources, 39(2). doi: 10.2307/3559016.
Kögel, T. (2004). Did the association between fertility and female employment within OECD countries really change its sign? Journal of Population Economics, 17(1). doi: 10.1007/s00148-003-0180-z.
Kudła, J. (2014). The impact of fiscal instruments on fertility: a synthesis of the economic theory. Journal of Economics and Management, 18.
Laroque, G., & Salanié, B. (2004). Fertility and financial incentives in France. CESifo Economic Studies, 50(3). doi: 10.1093/cesifo/50.3.423.
OECD (2017). Taxing wages 2017. Paris.
Ohinata, A. (2011). Fertility response to financial incentives evidence from the working families tax credit in the UK. SSRN Electronic Journal, 851. doi: 10.2139/ssrn.1117484.
Smallwood, S. (2002). New estimates of trends in births by birth order in England and Wales. Population Trends, 108.
Sommer, K. (2016). Fertility choice in a life cycle model with idiosyncratic uninsurable earnings risk. Journal of Monetary Economics, 83. doi: 10.1016/j.jmoneco.2016.08.002.
de Tray, D. (1973). Child quality and the demand for children. Journal of Political Economy, 81(2). doi: 10.1086/260154.
Werding, M. (2010). The economics of the family and its policy implications: why should we care about fertility outcomes? In N. Takayama, M. Werding (Ed.) Fertility and public policy: how to reverse the trend of declining birth rates. doi: 10.7551/mitpress/9780262014519.003.0002.
Yasuoka, M., & Goto, N. (2015). How is the child allowance to be financed? By income tax or consumption tax? International Review of Economics, 62(3). doi: 10.1007/s12232-014-0200-1.
Zhang, J. (1997). Fertility, growth and public investments in children. Canadian Journal of Economics, 30(4a). doi: 10.2307/136272.