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Born on the First of July: An (Un)natural Experiment in Birth Timing

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  • Joshua S. Gans
  • Andrew Leigh

Abstract

It is well understood that government policies can distort behaviour. But what is less often recognized is the anticipated introduction of a policy can introduce its own distortions. We study one such “introduction effect”, using evidence from a unique policy change in Australia. In 2004, the Australian government announced that children born on or after July 1, 2004 would receive a $3000 “Baby Bonus.” Although the policy was only announced a few months before its introduction, parents appear to have behaved strategically in order to receive this benefit, with the number of births dipping sharply in the days before the policy commenced. On July 1, 2004, more Australian children were born than on any other single date in the past thirty years. We estimate that over 1000 births were “moved” so as to ensure that their parents were eligible for the Baby Bonus, with about one quarter being moved by more than two weeks. Most of the effect was due to changes in the timing of inducement and caesarean section procedures. This birth-timing event represents a considerable opportunity for health researchers to study the impact of planned birthdays and hospital management issues.

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Bibliographic Info

Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 529.

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Date of creation: Jul 2006
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Handle: RePEc:auu:dpaper:529

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Keywords: introduction effect; timing of births; policy distortion;

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  1. Joshua S. Gans & Andrew Leigh, 2006. "Did the Death of Australian Inheritance Taxes Affect Deaths?," CEPR Discussion Papers 530, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Eliason, Marcus & Ohlsson, Henry, 2008. "Living to save taxes," Economics Letters, Elsevier, vol. 100(3), pages 340-343, September.
  3. Amy Finkelstein, 2007. "E-ZTax: Tax Salience and Tax Rates," NBER Working Papers 12924, National Bureau of Economic Research, Inc.
  4. Wojciech Kopczuk & Joel Slemrod, 2001. "Dying to Save Taxes: Evidence from Estate Tax Returns on the Death Elasticity," NBER Working Papers 8158, National Bureau of Economic Research, Inc.
  5. Lo, Joan C., 2003. "Patients' attitudes vs. physicians' determination: implications for cesarean sections," Social Science & Medicine, Elsevier, vol. 57(1), pages 91-96, July.
  6. Joshua S. Gans & Andrew Leigh & Elena Varganova, 2007. "Minding the Shop: The Case of Obstetrics Conferences," CEPR Discussion Papers 551, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  7. Joshua S. Gans & Andrew Leigh, 2012. "Bargaining Over Labour: Do Patients Have Any Power?," The Economic Record, The Economic Society of Australia, vol. 88(281), pages 182-194, 06.
  8. Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 539-555, August.
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