Can fiscal policy spur fertility?

Abstract

Research background: The decreasing fertility rate is a serious problem for policymakers as it affects the pension system as well as private consumption and savings. It seems reasonable to analyze whether fiscal policy may mitigate the low birthrate problem. Purpose of the article: In this paper we strive to answer the question whether fiscal incentives spur fertility if parents are rational. Methods: A theoretical economic model of utility maximization is applied to analyze the impact of fiscal policy on fertility. The conclusions are based on the analysis of comparative statics simulation calibrated for actual data from Poland. Findings & Value added: The results indicate that a substantial fertility effect can be obtained by raising subsidies for children or general benefits for families.