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Assessing the Fertility Effects of Childcare Cost Subsidies: Evidence from the Child and Dependent Care Tax Credit

Author

Listed:
  • Averett, Susan L.

    (Lafayette College)

  • Wang, Yang

    (University of Wisconsin-Madison)

Abstract

We examine the impact of the Child and Dependent Care Tax Credit (CDCTC) on fertility and parental investment in children. The CDCTC aims to support working parents but its availability only to families with children incentivizing having more children or increasing investment in existing ones. Using the Panel Study of Income Dynamics and the National Center for Health Statistics' Natality data, we analyze the effects of state-level CDCTC policies on fertility and birth outcomes. Results indicate that the CDCTC increases labor force participation rates for married mothers, potentially suppressing fertility rates. Additionally, it has a positive effect on gestational age.

Suggested Citation

  • Averett, Susan L. & Wang, Yang, 2023. "Assessing the Fertility Effects of Childcare Cost Subsidies: Evidence from the Child and Dependent Care Tax Credit," IZA Discussion Papers 16263, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16263
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    fertility; birth outcomes; child and dependent care tax credit;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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