Do Baby Bonuses Increase Fertility? Evidence From Michigan

• Economics

This paper studies the fertility effects of the Rx Kids program, the first baby bonus introduced in the United States. Beginning in 2024, the program was launched in Flint, Michigan and subsequently expanded to additional municipalities across Michigan, creating staggered variation in treatment timing across places. Using Michigan administrative birth records and a municipalitylevel staggered difference-in-differences design, we estimate the effect of Rx Kids on birth outcomes. We find that live birth growth rates increase in treated municipalities after adoption, even when accounting for moving from adjacent municipalities. We find that Flint's $7,500 baby bonus generates a small but statistically significant fertility response: actual 2024 births exceeded a three-year pre-treatment baseline by roughly 7.5%, implying $107,000 in program spending per induced birth. These results provide the first U.S. evidence that direct cash transfers tied to childbirth can measurably affect fertility behavior. We also present a version of the Barro-Becker model in which a baby bonus lowers the effective cost of childbearing and increases fertility as well as a lifecycle model with fiscal accounting to measure the indirect implications for the marginal fiscal value of an induced birth.