BABY BONUS AND FERTILITY: EMPIRICAL ANALYSIS OF THE EFFECT OF BIRTH SUBSIDIES ON FERTILITY RATES IN SINGAPORE

Abstract

In the past 30 years, the Singapore government has offered an array of birth incentives to stem declining and below-replacement fertility rates. The Baby Bonus (BB) Scheme implemented in 2001 is probably the most explicit incentive, giving parents "cash-for-kid" to defray the financial costs of childrearing. The OLS results suggest that the one-time BB is relatively ineffective compared to the positive ongoing effect of other pronatalist policies (mainly tax reliefs) in place since 1987. This thesis in encompassing the BB and the basket of pronatalist policies, estimates the expected costs of raising a child to age 21 and compares the expected present value of birth subsidies and tax savings for women with children. It is expected to cost $562,000 for 30-year old median-income mother to raise her first child, of which 9% is reimbursed through birth subsidies and tax savings.