Aid and Fertility

Abstract

This paper uses a panel data from developing countries to study the relationship between foreign aid flows and fertility rates. By making use of natural disasters in neighboring countries as an instrumental variable to foreign aid receipts, I find that a percentage point increase in the share of aid in the GDP increases on average fertility rates among the population by 0.045 additional children. This can be translated to an additional child for about every 22 women of childbearing age. The positive effect of foreign aid on fertility rates can contribute to the current debate on foreign aid, and supply an additional explanation for its limited efficacy historically. By making use of the same instrumental variable, I also find no effect of foreign aid on other determinants of economic growth and growth itself.