I take advantage of the gradual phase out of USAID’s contraceptive donations to the Philippines from 2004 to 2008 as a natural experiment that exogenously disrupted publicly-provided contraceptive supply. Prior to this, more than two-thirds of the country’s contraceptive users relied on free supplies from the public sector, which in turn relied entirely on donations from international aid agencies for its contraceptive supply (of which USAID was the primary donor). Because it succumbed to pressure from the Catholic church, the national government did not fill the shortage that occurred. While it devised a progressive allocation schedule for the distribution of the declining contraceptive supply received from donors at the central office and delivered to the different provincial and city offices, the actual distribution of contraceptives was erratic, intermittent, and unanticipated due to shipment delays, inventory miscues at the central office, and lumpy deliveries induced by round lot sizes.

Utilizing substantial geographic and temporal variation in the proportion of women of reproductive age that had provisions for contraceptive supply from the public sector at the province-quarter level, this research looks into the short-run fertility impact of the contraceptive supply disruption. This panel fixed effects identification strategy isolates the contribution of an important supply-side determinant in reducing fertility and allows estimation of the causal impact of taking funding away from the contraceptive supply component of publicly-managed family planning programs.

Results using vital statistics data show that a demonstrable linkage exists between diminishing contraceptive supply from the public sector and higher general fertility rates, which suggests that couples’ compensating behavior may be limited or incomplete. Furthermore, a woman-level analysis of pregnancy risk shows that this impact was more severe for rural residents, the poor, and the less educated, so that reducing or eliminating publicly-provided contraceptive supply has important welfare consequences.