October 2013

No. 7705: Assessing the Impact of the Maternity Capital Policy in Russia Using a Dynamic Model of Fertility and Employment

revised version published in: Labour Economics, 2014, 30, 265-281

With declining population and fertility rates below replacement levels, Russia is currently facing a demographic crisis. Starting in 2007, the federal government has pursued an ambitious pro-natalist policy. Women who give birth to at least two children are entitled to "maternity capital" assistance ($11,000). In this paper we estimate a structural dynamic programming model of fertility and labor force participation in order to evaluate the effectiveness of the policy. We find that the program increased long-run fertility by about 0.15 children per woman.