'...And one for the country' The effect of the baby bonus on Australian women's childbearing intentions

In 2004, at a time when the nation was experiencing the lowest fertility trends in its history, the Australian Federal Government introduced the offer of a cash payment of $3,000 to all women on the birth of a new baby. The maternity payment, commonly known as the baby bonus, was increased to $4,000 in 2006 and to $5,000 in 2008. While not explicitly declared a pronatalist policy at the time of its introduction, the baby bonus was later credited with helping to halt the decline of the nation's aggregate birth rates. This paper examines the effect of this policy on Australian women's childbearing intentions from 2001 to 2008, using panel data from the Household, Income and Labour Dynamics (HILDA) Survey. The results indicate that the introduction of the baby bonus coincided with a statistically significant increase in women's childbearing intentions. More specifically, the strongest increase occurred among women from lower-income households, potentially implying that the policy had the strongest effect on women who, given their current characteristics, are relatively likely to be reliant on welfare assistance to raise their children over the long term. The inferences drawn from the paper's findings raise concern over the capacity of the baby bonus policy to reduce aggregate dependency rates.