A baby bonus boom?

A story on The Age website this afternoon, referring to the release of the ABS birth statistics for 2006, is headlined ‘New figures reveal our baby boom’. It reports:

Australian Bureau of Statistics data released today showed that 265,900 births were registered in 2006, the second highest since the record 276,400 births recorded in 1971.

The baby bonus rate changed during the year, but on my estimates that would have cost taxpayers $950 million. So did nearly a billion dollars buy us an increase in the number of babies being born?

A closer examination of the statistics suggests not. The number of babies born per 1,000 women in their twenties, physically the most favourable time for having children, has declined since the baby bonus began, continuing a long-term trend. What’s driving increasing fertility is a big increase in the proportion of women in their 30s having kids. The number of babies born to women aged 35-39 is up more than 20% since 2003, to 48,505 in 2006.

What this probably means is that we are seeing the effects of a cohort of women delaying having kids, causing first a drop in births when previous 20-something motherhood did not happen, and then a surge when, in their thirties, these women finally got around to having a family. The low birthrates observed in the current 20-something group suggests that they too are postponing children, and that the baby bonus is having little effect on the total number of babies who were ever going to be born.

Nor is there any sign here of those perhaps most susceptible to financial incentives, such as teenage girls, having kids to get the money. Teen births are declining.

The vast sum of money being spent on families – and the baby bonus is petty cash compared to the FTB – does not seem to be having any effect on family formation and there is no clear evidence that they are reducing divorce. All it does is make families more affluent, but also more reliant on the welfare state, than other households.

Update 30 October: The Age this morning, after time to read the ABS figures more carefully, has a better headline: ‘No rush to have kids in Australia’.

7 thoughts on “A baby bonus boom?

  1. I think its hard to conclude anything from those figures since its hard to know what the baseline is. I find it hard to imagine that the baby bonus had any effect, but there could have been declines across the entire age range otherwise. I think you really need to look at other variables apart from just births to find this out.


  2. Conrad – I agree it would be good to look at other variables, but we do have one baseline, the figures before the baby bonus was introduced. To say that the bb was having an effect we’d need also to explain why those who are more affluent are more responsive than those who are less affluent.


  3. I agree it’s unlikely the BB is having any effect. If they insist on such ridiculous measures (up there with the first-home owners’ scheme), they could at least restrict the BB to the third child, or at worst, not the first. That would nearly halve the cost.


  4. Women in their 30s are possibly much closer to the margin of decisionmaking given that fertility declines with age, especially if that decision has previously been deferred, as you suggest. So it is not clear to me that they should be less responsive to incentives and could possibly be even more so. A woman in her 20s has more time to collect the bonus.


  5. While I’m no fan of the baby bonus, Rajat, it is probably worth remembering that the bonus itself is a transfer, not a cost.


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