The impact of expected child-rearing expenses on childbirth based on the matching of two Korean panel data

Abstract

In Korea, recent upward trends in age of marriage and downward trends in fertility rates have motivated the Korean government to provide childbirth grants and Early Childhood Education and Care (ECEC) subsidies. Through such provisions, the government hopes to lower parents’ concerns regarding child-rearing expenses and to promote higher birth rates. Using combined data from the Panel Study of Korean Children (PSKC) and the Korea Longitudinal Study of Women and Families (KLoWF), this study analyzes the relationship between birth rates and anticipated child-rearing expenses. The method of kernel matching was used to combine and analyze information on children from the KLoWF and the child care environment as well as on child-rearing expenses from the PSKC. The study’s findings suggest a significant but weak relationship between birth rates and the anticipated financial costs for raising a child. This relationship is more prominent in the low-education and low-income group than in economically well-situated and highly educated families. Based on the results, we suggest the following policy recommendations: firstly, further research needs to be conducted to determine the effects of governmental support on child-rearing. Secondly, customized support that considers family income and education should be provided to improve birth rates.