Andrea Caria (University of Cagliari)
Marco Delogu, Maria De Paola and Giambattista Salinari
We estimate the causal effects of a large cash transfer on fertility and household labor supply in a lowest-low fertility setting. Our analysis exploits a sharp spatial eligibility threshold in the Sardinian birth bonus, which provides monthly transfers for children born after January 2022, amounting to e600 for first-born children and e400 for subsequent children, to families residing in municipalities with fewer than 3,000 inhabitants. Exploiting data from the Italian Statistical Office and administrative records, we use a regression discontinuity design to identify the causal impact of the policy on fertility behavior and parental labor market outcomes. We find that the program increased birth rates by approximately 20 percent and raised the probability of an additional birth by 3.5 percentage points among families with pre-existing children. On the labor supply dimension, we find evidence of a negative impact: the policy reduces the probability that mothers remain employed after childbirth and decreases hours worked among those who continue working. These effects are concentrated among lower-income women and those with weaker pre-birth labor market attachment. By contrast, fathers labor supply remains virtually unaffected by the policy.