Working Papers

   Do cash rewards affect an individual or couple’s decision to give a birth? We study it using the Korean Longitudinal Survey of Women and Families from 2007 to 2016. Korean municipal and provincial governments pay cash rewards to the parents of a newborn to encourage birth. Due to the local nature of this policy, the timings of the introduction and institutional details including the amount of the rewards are different from each other. We try to identify the effect of cash rewards on a married couple’s birth spacing by utilizing local variation in the policy. Our survival analysis shows that cash rewards for birth reduce the time taken from marriage to the first birth. We find that the increase in cash rewards for the first birth by one million won leads to the earlier birth by about half a year. However, we find no effect of the cash rewards for the second and third children on their births. Robustness checks show that our findings are not driven by policy endogeneity or selective migration across districts.