By exploiting variations in pro-natalist cash grant amounts across 225 municipal districts
in South Korea from 2005 to 2010, we estimated the causal impact of cash grants on
fertility. After controlling for administrative district fixed effects, a system GMM analysis
revealed a rise in grant amounts by 1,000 USD increased the crude birth rate by 4.4%. The
results imply that the required grant amount for one extra birth increases with the parity of
births. The sub-group analysis by maternal age suggests that the grant may have a
significant permanent impact on the completed lifetime fertility.