Changing the Cost of Children and Fertility: Evidence from the Israeli Kibbutz

Prior to 1996, Israelis in collective communities (kibbutzim) shared the costs of raising children equally. This paper examines the impact of privatizing costs of children on the behavior of young couples using universal microdata on kibbutz members. Exploiting variation in the increase in cost sharing across kibbutzim, we estimate that lifetime fertility declined by 0.59 children in the cohorts of affected parents. We also examine the exit decisions of members, and find that couples were most likely to leave the kibbutz if they were either higher income or lower fertility. This pattern is also observed among Israeli emigrants, in which higher educated and lower fertility couples are more likely to leave Israel.