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State Income Tax Policy and Family Size: Fertility and the Dependency Exemption

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  • Leslie A. Whittington

    (University of Maryland)

Abstract

Tax exemptions for dependents are a subsidy to having children and therefore create incentives for fertility. This article explores the relationship between the changing tax value of the state exemption for dependents—combined with the federal exemption—and the observed fertility choices of married couples. Using data from the Panel Study on Income Dynamics (PSID), the article finds that the federal exemption does have a positive impact on differential period fertility for the sample of 229 married couples in this study. This effect is dampened by an offsetting labor force participation and marginal tax rate effect, but it does provide evidence that fiscal policy can influence fertility. State income tax exemptions do not appear to significantly influence the fertility decisions of the sample.

Suggested Citation

  • Leslie A. Whittington, 1993. "State Income Tax Policy and Family Size: Fertility and the Dependency Exemption," Public Finance Review, , vol. 21(4), pages 378-398, October.
    • Handle: RePEc:sae:pubfin:v:21:y:1993:i:4:p:378-398
    DOI: 10.1177/109114219302100402
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    References listed on IDEAS

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    1. Whittington, Leslie A & Alm, James & Peters, H Elizabeth, 1990. "Fertility and the Personal Exemption: Implicit Pronatalist Policy in the United States," American Economic Review, American Economic Association, vol. 80(3), pages 545-556, June.
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    5. Cigno, Alessandro, 1986. "Fertility and the Tax-Benefit System: A Reconsideration of the Theory of Family Taxation," Economic Journal, Royal Economic Society, vol. 96(384), pages 1035-1051, December.
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    7. Mary Borg, 1989. "The Income-Fertility Relationship: Effect of the Net Price of a Child," Demography, Springer;Population Association of America (PAA), vol. 26(2), pages 301-310, May.
    8. Long, James E., 1990. "Marginal Tax Rates and IRA Contributions," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(2), pages 143-153, June.
    9. Pitt, Mark M & Rosenzweig, Mark R, 1990. "Estimating the Intrahousehold Incidence of Illness: Child Health and Gender-Inequality in the Allocation of Time," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(4), pages 969-980, November.
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    Cited by:

    1. Lucia Granelli, 2016. "Family Tax Policy in a Model with Endogenous Fertility à la Barro-Becker," LIDAM Discussion Papers IRES 2016010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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