Determining the impact of the 2004 Australian Baby Bonus on fertility rates using a synthetic control analysis

The longstanding issue of declining fertility in developed nations motivates a revaluation of the effectiveness of fertility‐targeted policies. This thesis focuses on the 2004 Australian Baby Bonus, a past pronatalist incentive offering a lump sum financial transfer for every child born after 1 July 2004. We employ the synthetic control method to construct a counterfactual scenario for Australia in the absence of the policy's introduction. Using aggregate country‐level data from the World Bank World Indicator's Database from 1998 to 2012, we carefully select suitable Organisation for Economic Co‐operation and Development countries as control units and economic indicators to include as covariates. Our primary specification reveals a 6.82% increase in total fertility between 2005 and 2012, induced by the ABB. Robustness tests, including various model specifications, consistently confirm a positive fertility effect. This comparative case study provides a comprehensive analysis of the ABB's impact, emphasising the significance of methodological choices in assessing fertility‐related policies.