Fertility incentives in Canada: Period and cohort perspectives

Abstract

We study the fertility effects of the 1997 Quebec Family Policy using two complementary approaches: (i) a period-based repeated cross-sectional analysis that examines the impact on period fertility (i.e., fertility rates in a given calendar year, such as births per 1,000 women age 15 to 49), and (ii) a cohort-based panel analysis that examines the impact on completed fertility for specific cohorts. Using aggregate vital statistics (1991–2019) and the synthetic control method, the period analysis indicates a long-run increase in period fertility, which may reflect both shifts in the timing of childbearing and changes in completed fertility among affected cohorts. To assess completed fertility, we conduct panel analysis using a 20% sample of Canadian tax returns and a dynamic difference-in-differences approach. For two relatively older cohorts of women who already entered reproductive years before the reform, we find that the policy reduced completed fertility while increasing their labour supply. Taken together, the findings show that the policy raised period fertility but lowered completed fertility for certain cohorts, indicating that its effects depend on the life-cycle stage at which women were exposed.