Fertility Regulation and Economic Resources: Evidence from Indonesia

Christopher McKelvey, University of California, Los Angeles

Substantial international aid is spent reducing the cost of contraception in developing countries, as part of a larger effort to reduce total fertility and increase investment per child worldwide. The efficacy of such programs, however, remains uncertain, as non-random placement of subsidies and insufficient cross-sectional price variation have thwarted prior attempts to estimate the effect of (monetary and non-monetary) contraceptive costs on fertility behavior. Exploiting the enormous price variation induced by the economic crisis in Indonesia, this paper employs longitudinal data from the Indonesian Family Life Survey to pin down the effect of contraceptive price, accessibility, and availability on contraceptive use and method choice over the life course. Results indicate that monetary costs are not an important determinant of contraceptive use, although a change in the relative price of available contraceptive technologies may influence the selection of contraceptive method.