Big child subsidies don't actually increase the birth rate; they just tempt families to move from the next town over.
We often assume that local government perks like free childcare or medical subsidies help solve birth rate crises. This study of a 'model' Japanese city shows that its population boom was entirely zero-sum—families simply moved across the street from neighboring wards to get the benefits, leaving the regional birth rate completely unchanged.
Child Benefit Expansions and Cross-Border Spillovers: Evidence from Akashi-Kobe Municipal Border in Japan
SSRN · 6307161
We examine whether municipal childcare expansions generate net growth or merely reallocate childrearing households across municipalities. We study Japan's Akashi City, which sharply expanded child medical-care and childcare-fee subsidies in the 2010s, widening benefit gaps with nearby municipalities. Using a Difference-inDifferences design-Akashi as the positive treatment group, adjacent wards in Kobe as the negative treatment group, and Himeji (a nearby city in a different commuting zone) as th