Does cutting child benefits reduce fertility in larger families? Evidence from the UK’s two-child limit

Abstract

We study the fertility effects of restricting child-related social assistance to the first two children in the family. As of April 2017, all third and subsequent children born to low-income families in the UK were made ineligible for approximately 3000 GBP of means-tested child benefits per year. We leverage administrative births microdata to estimate the impact of the two-child limit on higher-order births with a triple differences approach. We find some suggestive evidence of a decline in higher-order fertility among low-income families. However, effects are not statistically significant and compared to previous research in the UK and elsewhere, the implied elasticities are small.

Mary Reader

PhD Student

I am a PhD student in Economics at Stanford University. I am also a Visiting Fellow at STICERD at the LSE.