Author: Hyerim Park(Korea Institute of Local Finance)

<Abstract>

This paper classifies local government pro-natalist policies into cash and non-cash policies and analyzes the impact of local government pro-natalist policies on fertility. To compensate for the limitations of previous studies that mainly analyzed the effects of cash support policies among local government fertility support policies, I classify local government fertility support policies into cash transfer policies for childbirth subsidies and into service-infrastructure policies such as care centers, and estimate the impact of each policy on fertility. Using a panel fixed-effects model for 226 municipal districts by year and region from 2009 to 2021, the results show that both the weighted average fertility subsidy by birth order and the budget for services and infrastructure per child in the childcare sector have a positive and statistically significant effect on the total fertility rate. This suggests that local government pro-natalist policies can help raise the fertility rate not only through cash support policies that increase the general income of households, but also through service and infrastructure policies that directly reduce childcare costs. Although rebounding the fertility rate through local government policies is limited due to complicated socio-cultural and economic factors, the results of this study suggest the need to implement specialized non-cash policies in addition to local government cash policies.