Panel Paper: Children of the Pill: The Effect of Subsidizing Oral Contraceptives On Children's Health and Wellbeing

Thursday, November 8, 2012 : 1:55 PM
International B (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Emilia Simeonova, Princeton University and Andreas Madestam, Stockholm University

We use a series of municipal-level social experiments in Sweden to identify the effect of oral contraception (the pill) subsidies on women’s and children’s short- and long-term health and economic outcomes. The reforms were implemented by some Swedish municipalities between 1989 and 1998. They covered between 25% and 100% of the sticker price of the pill for subsets of women aged from up to 19 to up to 24. We exploit variation in age eligibility cut-offs across municipalities as well as the size of the subsidy and the year and month of implementation. A number of different registry-data sources were combined to obtain information on the universe of Swedish women and their children born between 1985 and 2010. We find that subsidizing oral contraception for young women increases pill sales, and leads to fewer abortions and lower fertility among the affected group. There are significant selection effects on the type of mother who gives birth after subsidy implementation – young women who chose to have child despite being eligible for reduced pill prices are less likely to have graduated from high school and less likely to have smoked during pregnancy compared to similar women who had a child before the subsidy implementation. Their children are born with better initial health, however they do worse in school. We offer a simple model of fertility choice that rationalizes these findings. When we compare the set of women who were subsidy-eligible at some point of their lives but may have given birth at ages above the legally mandated upper bound for subsidy eligibility, we find that they obtained higher education, earned higher wages, and were more likely to enter a father’s name on the birth certificate than women of the same birth cohorts who were never eligible for the pill subsidies. Furthermore, the children eventually born to these women had better health and did better in school compared to their ineligible peers.