Evaluating Local-Level Pronatalist Policies: Assessing the Impact of Stay-at-Home Allowances on Fertility in the City of Zagreb

Ivan Cipin , University of Zagreb, Faculty of Economics and Business, Department of Demography
Petra Medimurec, University of Zagreb, Faculty of Economics & Business
Dario Mustac, University of Zagreb, Faculty of Economics & Business

In recent decades, cash incentives promoting childbearing have become widespread in Croatian cities and municipalities, aiming to address depopulation. Zagreb, the capital city, introduced an unconventional pronatalist policy in August 2016, offering generous financial support to parents of three or more children, leading to a considerable withdrawal of children from public childcare facilities. Upon achieving the ‘parent-caregiver’ status, available to stay-at-home parents, mothers or fathers became eligible for a significant monthly allowance amounting to 65% of Zagreb’s average gross wage. Notably, these monthly allowances were intended to continue until the youngest child in the household reached the age of 15. Zagreb’s policy has sparked debates due to its potential to reinforce traditional gender roles, its implications on domestic responsibilities, and its impact on participation in early childhood education programmes. The sudden surge in users strained the city’s budget, leading to the suspension of the programme in September 2021. Research on the effects of cash-for-care incentives on fertility is limited, with varying results. Our study investigates the relationship between home care allowances and fertility, exploring the influence on fertility rates and the timing of higher-order births. We use vital statistics data from 1998 to 2021 for Zagreb and other major Croatian cities. Preliminary findings based on the difference-in-differences approach show substantial increases in third- and fourth-order births in Zagreb compared to the control group. With more data forthcoming, we plan to expand our analysis, conduct sensitivity checks, and explore alternative methods to estimate policy effects, leveraging micro-level data.

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 Presented in Session 21. Policy Effects on Fertility