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Fertility Response to the Tax Treatment of Children

Author

Listed:
  • Gopi Shah Goda
  • Kevin J. Mumford

Abstract

One of the most commonly cited studies on the effect of child subsidies on fertility, Whittington, Alm, and Peters (1990), claimed a large positive effect of child tax benefits on fertility using time series methods. We revisit this question in light of recent increases in child tax benefits by replicating this earlier study and extending the analysis with an additional 20 years of data. We find that their results suffer from the spurious regression problem, and are not robust to differencing. We find evidence of a statistically significant fertility response to a change in the real value of child tax subsidies occurring with a one- to two-year lag, but a much smaller and statistically insignificant total effect after several years, suggesting that a change in the child tax subsidy most strongly affects the timing of births.

Suggested Citation

  • Gopi Shah Goda & Kevin J. Mumford, 2009. "Fertility Response to the Tax Treatment of Children," Purdue University Economics Working Papers 1219, Purdue University, Department of Economics.
    • Handle: RePEc:pur:prukra:1219
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    File URL: https://business.purdue.edu/research/Working-papers-series/2009/1219.pdf
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    Citations

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    Cited by:

    1. Michael F. Lovenheim & Kevin J. Mumford, 2010. "Do Family Wealth Shocks Affect Fertility Choices? Evidence from the Housing Market Boom and Bust," Purdue University Economics Working Papers 1228, Purdue University, Department of Economics.
    2. Ralph Lattimore & Clinton Pobke, 2008. "Recent Trends in Australian Fertility," Staff Working Papers 0806, Productivity Commission, Government of Australia.
    3. Daniel Chen, 2011. "Can countries reverse fertility decline? Evidence from France’s marriage and baby bonuses, 1929–1981," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 253-272, June.

    More about this item

    Keywords

    fertility; income taxation; child tax benefits; personal exemption;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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