Fertility has been declining across most advanced economies, raising concerns about long-term economic growth, labour supply, and fiscal sustainability. Pelin Akyol and Alu Vergili's research provides the first comprehensive analysis of Australia’s Baby Bonus, a large universal cash transfer introduced in 2004, using linked administrative data that follow mothers’ fertility through 2022. The 17-year horizon allows them to distinguish between timing shifts (tempo effects) and genuine increases in completed fertility (quantum effects), overcoming a key limitation in the literature.

Using interrupted time series analysis, Akyol and Vergili's research finds that the Baby Bonus increased monthly births by 6.5 %. Birth responses were concentrated among lower-income mothers, with increases of 10 % for those without taxable income and 8 % for those below the median, and minimal effects among high-income or university-educated mothers. Births increased by 6–8 % at first and second parity, with the strongest response at third and higher-order births and were particularly pronounced among women aged 35–39. Importantly, they find no evidence of birth spacing adjustments; instead, mothers exposed to the policy had 6.8 % more children in total by 2022, indicating permanent increases in completed fertility. These results show that direct cash transfers can raise completed fertility, with implications for policy responses to declining birth rates and ageing populations.

This study is co-authored by Pelin Akyol (pelin.akyol@e61.in) and Ali Vergili (ali.vergili@e61.in) from the e61 Institute.

Pelin Akyol holds a PhD in Economics from Penn State University and is currently Research Manager at the e61 Institute in Sydney. Her research spans applied microeconomics, focusing on the economics of education, labour markets, demographic change, and health. Her recent work examines factors affecting fertility decisions, caregiving behaviour, and gender differences in educational outcomes, drawing on survey and large-scale administrative data. At e61, she leads research on fertility and demographic challenges, care responsibilities, and the National Disability Insurance Scheme.

Her research has been published in leading journals, including the Journal of Health Economics, European Economic Review, Oxford Bulletin of Economics and Statistics, and Journal of Human Capital. Before joining e61, she was an Assistant Professor of Economics at Bilkent University, Turkey.

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