Cash Transfers and Fertility: Evidence from an Ultra-Low Birth Rate Society

This study examines the effects of cash transfers on fertility in Korea, which has the world’s lowest fertility rate. Unlike several previous studies, we document robust evidence of the limited role of cash transfers in encouraging conception using population-level birth certificate data. As a possible explanation, we propose that the marginal effects of lowering childcare costs can diminish as the childcare burden increases. Consistent with this conjecture, we document little evidence that the cash transfers significantly altered household consumption expenditure nor labor supply, based on household expenditure survey data. JEL codes: I38, J13, J18, D10