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An Economic Analysis of the Australian Baby Bonus Sarah June

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An Economic Analysis of the Australian Baby Bonus Sarah June An Economic Analysis of the Australian Baby Bonus Sarah June Sinclair A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy Economics School of Economics, Finance and Marketing, College of Business RMIT Declaration of Originality I certify that except where due acknowledgement has been made, the work is that of the author alone; the work has not been submitted previously, in whole or in part, to qualify for any other academic award; the content of the thesis is the result of work that has been carried out since the official commencement date of the approved research programme; any editorial work, paid or unpaid, carried out by a third party is acknowledged; and, ethics procedures and guidelines have been followed. Signed: Sarah J Sinclair Date: ii Publication Acknowledgement Research related to Chapter 4, Chapter 5 and Chapter 6 has been developed into papers for publication. A paper relating to Chapter 4 has been published in the Economic Record . The official reference is as follows: Sinclair, S., Boymal, J. & De Silva, A. (2012). A re-appraisal of the fertility response to the Australian Baby Bonus. Economic Record , 88 , 78–87. A paper developed from the empirical analysis presented in Chapter 5 and Chapter 6 has been peer reviewed at Demography , although not accepted for publication was acknowledged as a well written paper addressing an important topic. The associated working title and reference is as follows: It is currently submitted to the Journal of the Royal Statistical Society, Series A Sinclair, S., Boymal, J. & De Silva, A. (2012). Is the fertility response to the Australian Baby Bonus heterogeneous across maternal age? Evidence from Victoria (Paper No. 42725). Munich Personal RePEc Archive (MPRA). iii Acknowledgements This thesis would not have been possible without the expertise, support and guidance of my supervisors Dr Jonathan Boymal and Dr Ashton de Silva. I thank you both for the team effort of guiding me to completion. Words cannot express my gratitude for the good natured, generous support and guidance with which you both provided me throughout this candidature. I am forever indebted for your time, patience and encouragement, but most of all, your friendship. It is with sadness that I acknowledge and thank my former Head of School, the late Professor Tony Naughton. Without his support and the ongoing support from his successor Professor Tim Fry at the School of Economics, Finance and Marketing at RMIT, there would be no thesis. I would also like to thank the Consultative Council on Obstetric and Paediatric Mortality and Morbidity for permitting access to the Victorian Perinatal Data Collection (VPDC), and in particular, Katherine Gibson for her help in the application process. Meg, thank you for listening patiently and guiding gently. Your friendship has kept me sane. Sveta, thank you for having faith in me from the very beginning of this journey, you have been a wonderful mentor and friend. Without your support and encouragement this learning journey would never have begun. Thank you to my family, in particular, my sister Michelle, who when faced with a major health challenge during my candidature, helped put it all in perspective. Thank you also to my parents for their unwavering love and support. How lucky I am to have such positive influences in my life. Finally, thank you Daniel, for your love, encouragement and support. To my Baby Bonus boys, Rian and Charlie who patiently ask me when I will be finished my work on the ‘puter’. You light up my days. Kaiden and Toula, for the many times you helped with the boys and to Annise, hopefully, we can soon enjoy some fun-filled holidays. iv A.Thesis abstract Abstract The Australian Baby Bonus offering parents $3,000 on the birth of a new child was announced on 11 May 2004. While the Baby Bonus has received academic attention, 1 and ample media commentary on its implications and outcomes, there are no comprehensive studies to date that have considered whether the Baby Bonus has had a sustained effect on the national fertility rate, nor any that have attempted to disentangle the effects of policy from macroeconomic influences and underlying demographic trends in fertility choice in Australia during the same period. The availability of five years of birth data following the introduction of the Baby Bonus allows a more comprehensive analysis of the policy outcomes than is current in the literature. First, a significant increase in birth numbers 10 months following the announcement of the Baby Bonus is identified, and this overall increase was sustained up to the end of the observed period. Given the importance of separating policy effects from prevailing demographic trends such as postponement and subsequent recuperation, the analysis is extended to identify any heterogeneity across maternal age and parity 2. 1 Anderson (2007); Balter (2006); Drago et al. (2011); Einarsdóttir et al. (2012); Gans & Leigh (2009); Gray at al. (2008); Heard (2010); Jackson and Casey (2009); Lain et al. (2009); Langridge et al. (2010); McDonald (2005); Parr and Guest (2011); Risse (2010); Sinclair et al. (2012). 2 The number of times a woman has given birth to a fetus with a gestational age of 24 weeks or more v Applying multivariate time series analysis to population data from the Victorian Perinatal birth data register VPDC (N = 1,671,774, T = 312), changes in the mean level and growth of age and order-specific birth ratios following the policy introduction are examined. All age groups except teenagers show a positive fertility change following the policy’s introduction. The results suggest that the policy may have elicited changes in fertility behaviour, evidenced by a higher growth in fertility of younger maternal age groups (from 20 to 29 years of age), which has been sustained past 2008, even as a growth in birth ratios of older cohorts was stabilising. An analysis of parity, across specific age groups suggests the observed change in fertility reflects permanent fertility increases over the period of study, rather than simply an adjustment of the timing of births. The analysis also controls for time-varying macroeconomic variables often put forward as an explanation for the increased fertility levels. vi Contents Declaration of Originality ................................................................................................... ii Publication Acknowledgement .......................................................................................... iii Acknowledgements ............................................................................................................. iv Abstract ............................................................................................................................... v Contents ............................................................................................................................. vii List of Tables ...................................................................................................................... ix List of Figures...................................................................................................................... x List of Abbreviations .......................................................................................................... xi Chapter 1: Introduction and Background ......................................................................... 1 1.1 Thesis Overview .......................................................................................................... 1 1.2 Aims and Objectives of This Thesis ............................................................................. 4 1.3 Methodology Applied .................................................................................................. 7 1.4 Background ................................................................................................................. 8 1.5 Thesis Organisation and Structure ............................................................................. 10 1.5.1 Review of the Related Literature (Chapter 2) ...................................................... 10 1.5.2 Methodology Overview (Chapter 3) .................................................................... 11 1.5.3 An Appraisal of Baby Bonus Effect on National Fertility (Chapter 4) ................. 11 1.5.4 Heterogeneity of Response to the Baby Bonus across Maternal Age: A Victorian Case Study (Chapter 5) ....................................................................... 12 1.5.5 ‘One for the Country’: The Victorian Case Study (Chapter 6) ............................. 13 1.5.6 Contributions and Conclusion (Chapter 7) .......................................................... 14 Chapter 2: Review of the Related Literature ................................................................... 15 2.1 Theoretical Background: Incentives and Fertility Choice ........................................... 15 2.2 International Empirical Literature .............................................................................. 19 2.3 Australian Empirical Literature .................................................................................. 21 2.4 Birth Timing and Fertility Measurement .................................................................... 24 2.5 Economic Determinants of Fertility ........................................................................... 26 2.6 Discussion ................................................................................................................
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