Could a child subsidy increase long-run fertility and stability of families? Could it have equilibrium effects? Evidence from the “Maternity Capital” program in Russia

Does subsidizing childbirth affect the overall fertility or just the timing of births? Do such policies have equilibrium effects? We evaluate the effects of a series of subsidies, called Maternity Capital, aimed at increasing fertility in Russia introduced in 2007-2012. Maternity Capital resulted in a significant increase in fertility both in the short run (by 10%) and in the long run (by more than 20%), and has already resulted in an increase in completed fertility for a large cohort of Russian women. The estimates imply that additional birth costs approximately 50,000 US dollars in Child subsidies. There are substantial general equilibrium effects: It affects family stability and the housing market (as the subsidy is conditional and can be used mainly to buy housing). The effects are heterogeneous. Fertility grew faster in regions with a shortage of housing and with a higher ratio of subsidy to housing prices