California Center for Population Research

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 importance for fertility behaviors of keeping contraceptive prices low, however, remains unclear. Targeting of subsidies and insufficient price variation have hindered 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 availability and cost on contraceptive use and method choice over the life course. Results indicate that monetary costs are not an important determinant of contraceptive use.