Estimating the Heterogeneous Response to a Universal Child Benefit Programme: Do Education and Civil Status Play any Role?

Abstract

This paper evaluates the heterogeneous effect of a universal child benefit of €2,500 introduced unexpectedly in Spain in 2007. We estimate the effect of the reform across different demographic groups. Our findings suggest that the cash benefit increased fertility in the very short-run by 8%, having a special impact on second order births. In addition, we find suggestive evidence that the policy increased fertility in absolute terms (rather than just having an effect on timing of births), as women at the end of their fertile period responded the most. Moreover, our results confirm that the policy had asymmetric effects across education and civil status groups. Due to the rigidity in intergenerational mobility, this heterogeneity in response may have distributional implications for the next generations.