Assessing the impact of the maternity capital policy in Russia

• We evaluate the effect on long run fertility of a pro-natalist policy
• Women who give birth to a second or higher-order child receive a benefit worth $11,000
• We estimate a dynamic structural model of fertility and labor force participation using panel data
• The policy is included in the model explicitly through the budget constraint
• We find that the program increased long run fertility by 0.15 children per woman

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.