Fertility impacts of the two-child limit

This project will investigate whether the introduction of the two-child limit to the benefit system has impacted families’ decisions on the number of children they have.

In 2015 the Government announced a two-child limit to elements of child tax credit and Universal Credit for children born after 6th April 2017. Reducing government spending was one aim of the new rules. In addition, the policy explicitly attempted to influence parents’ decision-making on having more children, widening the individual and family behaviours that government sought to influence, far beyond decisions on whether and how much to work.

However, there is only limited evidence on the impact of financial incentives on fertility decisions, even more so on the impact of a two-child limit. Therefore, this project aims to estimate the impact of the policy on fertility decisions, assess whether the policy achieved its wider objectives and explore any unintended consequences it might have had.  

Employing an inter-disciplinary approach will allow the project team to answer two core research questions:

1. Did the number of third and subsequent children born to UK families fall after the announcement of the limit in 2015 and introduction in 2017?
2. Were there differential fertility trends among groups more or less likely to be affected by the limit (differentiating by region, age, socio-economic status and ethnicity)?

Drawing primarily on the ONS Birth Statistics for England and Wales, the analysis will use a difference-in-difference approach to examine whether observed changes in fertility for some groups are different from those observed for other groups that might be comparable, but who would not be affected by the policy change.

The quantitative estimates produced by the research will help to inform understanding of the effects of the two-child limit.

This project will work closely with How UK welfare reform affects larger families to provide evidence of the treatment of families by the welfare system and identify areas of focus for future change.