Maybe Baby in Armenia: The Effects of Cash Transfers on Fertility

Sammanfattning

This paper estimates the effect of Armenia's 2014 reform to the Universal Childbirth Benefit Program on fertility. The program provides a one-time lump-sum cash transfer at childbirth, with amounts increasing by birth order. The 2014 reform raised benefits for third- and fourth-order births, while the second-order birth benefit remained unchanged. Using household survey data between 2012-2018, birth histories were reconstructed to build a woman-year panel for women aged 15-35. The analysis applied a difference-in-differences design, comparing women with two or three children to women with one child. We find that the reform increased the probability of an additional birth by 2.12 percentage points for the treatment group relative to the control group, corresponding to a 47.6% increase over the pre-reform baseline. A back-of-the-envelope calculation implies a cost of about USD 5,860 per additional policy-induced birth. Robustness checks across alternative specifications support the qualitative robustness of the results. While the policy appears effective at increasing births, our findings suggest that financial incentives alone are unlikely to reverse broader demographic decline. The study informs pronatalist policy design and contributes to existing literature on fertility responses to financial incentives.