Since 1982, the Alaska Permanent Fund, a state-owned investment fund established using oil revenues, has paid out an annual dividend to every man, woman, and child living in Alaska, no strings attached. The value of the dividend fluctuates based on the price of oil and other budgetary considerations. In 2019, the dividend was $1,606 per person, or $6,424 for a family of four.
For researchers interested in human fertility, this raises an obvious question: Does a basic income going to every adult and child encourage families to have more kids?
A new NBER working paper, from CUNY’s Nishant Yonzan and Laxman Timilsina and Loyola Marymount’s Inas Rashad Kelly, suggests the answer is yes. They find that in the years after the dividend’s 1982 introduction, fertility in Alaska sharply increased relative to its previous trends. Their overall estimate is that the dividend increased fertility by over 13 percent.
That is a quite large effect — and in a country like the US where fertility hovers below “replacement” level, it could mean the difference between a population whose native-born population is growing or shrinking. And this finding could also bolster support for basic income and similar policies among social conservatives who worry deeply about falling fertility.
What the new Alaska fertility study says
The Alaska dividend is such a unique policy that it’s already inspired a healthy research literature, with several important studies coming out in just the last couple of years.
A 2016 paper by Matthew Berman and Random Reamey at the University of Alaska-Anchorage estimated that without the dividend, “about 25 percent more people would have fallen below the poverty threshold.” A 2018 report from University of Alaska-Anchorage’s Brett Watson, Mouhcine Guettabi, and Matthew Reimer estimated that in the days after the checks are sent, substance abuse incidents increase but property crimes fall — that is, recipients do sometimes spend their money on booze, but they’re also less tempted to steal once they have more money.
Also in 2018, UChicago’s Damon Jones and UPenn’s Ioana Marinescu found that the dividend does not deter people from working, and actually increases part-time work. Jones and Marinescu employed what’s known in the social sciences as a “synthetic control” method. Basically, they combine a number of other states whose patterns of employment, part-time work, and related statistics roughly match Alaska’s in the years before the policy was enacted. None of the states alone is a good comparison, but if you combine them carefully, you can come up with a “synthetic Alaska” for comparison.
The new fertility paper, from Yonzan, Kelly, and Timilsina, also uses a synthetic control design. Because they’re interested in fertility, not employment, they rely on states’ fertility rates, average time between births, and abortion rates to construct synthetic controls whose trends matched those of Alaska before 1982.
Before the introduction of the dividend in 1982, there was no difference in fertility rates in Alaska versus “Synthetic Alaska”; the Synthetic Alaska was specifically constructed so that this would be the case. But in the years after the dividend’s introduction, from 1983 to 1988, Alaska’s fertility rate rises markedly higher. Alaskans were having 11.3 more babies per 1,000 women than Synthetic Alaskans. The authors find no increase in teenage mothers having kids, but fertility rose for basically everyone from age 20 to 44, compared to the control group.
This is just one study, and there are some reasons for skepticism. Synthetic control studies are useful, but there’s always a risk that the other states that make up the “control” differed from Alaska in ways other than not having the dividend program. For the fertility rate comparison for 15- to 44-year-olds, the synthetic control is a weighted average of mostly Wyoming, a bit of Hawaii, and a very small bit of Washington, DC; these are all obviously quite different places from Alaska in ways that might influence fertility rates. That only matters for the analysis if they started to differ increasingly after 1982 but not before, but it’s hard to rule out that possibility.
What’s more, as the paper notes, the fertility rate in Alaska rose from 1976 to 1982 while it stagnated in the rest of the country, and fertility rates in Alaska overall fell after 1982. This, on its own, does not mean that the dividend did nothing; a simple before/after comparison like this is not as rigorous as the synthetic control method used in the paper. But it’s an odd pattern if the dividend had a really large effect on fertility.
Luckily, the paper reanalyzes the data using a method called “differences in differences,” comparing how fertility in Alaska changed to how it changed in all states after 1982. This method got very similar results to the synthetic control method. When two distinct methods arrive at similar conclusions, that’s usually a good sign the analysis is picking up a real phenomenon.
Alaska isn’t the first place where cash for kids has produced more kids
There is a large research literature on the effects of programs like Alaska’s, which give cash to families with kids, on fertility. The results generally support the idea that a subsidy can affect fertility rates, with an asterisk: It’s more common for cash programs to shift the timing of births or to encourage people to have the same number of kids they were always going to have earlier than it is to increase overall fertility.
That said, programs that shift overall fertility upward do exist. A recent paper by McMaster University’s Natalie Malak, Md Mahbubur Rahman, and Terry Yip looked at a now-defunct Quebec program called the Allowance for Newborn Children, which was more generous for a second, third, fourth, etc. child than for a first child. It was a quite large subsidy, but only matched Alaskan levels for the kids after the second-born. From 1992 to 1997, when it was at its highest level, the benefit was about US$414 for a first child, $828 for a second, and a whopping $6,617 for a third or higher child, the last of which was paid out quarterly over five years.
Quebec’s fertility fell below Ontario’s in the early 1980s, and then rebounded after the benefit was introduced in 1988. Fertility also fell after the policy was canceled in 1997. What’s more, Malak, Rahman, and Yip find that it specifically increased the share of families with two children who decided to have a third, suggesting that the structure of the benefit had the desired effect.
Most proposals to expand cash assistance for children in the US look more like the Alaska program than the Quebec one. The American Family Act of Sens. Michael Bennet (D-CO) and Sherrod Brown (D-OH) and Reps. Suzan DelBene (D-WA) and Rosa DeLauro (D-CT) proposes paying $300 a month for kids five and younger, and $250 a month for kids six to 16, with no variation for birth order.
The new Alaska evidence implies that such a program could meaningfully increase fertility in the US. That might garner some criticism, as conservatives have historically been critical of “welfare” programs for encouraging poor people to have children.
In their bestseller The Bell Curve, Richard Herrnstein and Charles Murray, the latter of whom remains one of the most influential conservatives in America, wrote, “The technically precise description of America’s fertility policy is that it subsidizes births among poor women, who are also disproportionately at the low end of the intelligence distribution. We urge generally that these policies, represented by the extensive network of cash and services for low-income women who have babies, be ended.” (Murray supports a basic income, but only one that excludes children and likely wouldn’t have these fertility effects.)
But other conservatives who worry that falling fertility augurs deeper societal problems could find much to like here, given survey evidence suggesting that Americans are having fewer kids than they’d like to, in part because parenting has become extraordinarily expensive. Indeed, the Alaska study itself might show that people are having fewer kids than they’d ideally like to: it implies that a lack of income was the only thing stopping some parents from having more kids.
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