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Fertility Response to the Tax Treatment of Children

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  • 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.

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Bibliographic Info

Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1219.

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Length: 41 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:pur:prukra:1219

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Related research

Keywords: fertility; income taxation; child tax benefits; personal exemption;

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Cited by:
  1. Daniel Chen, 2011. "Can countries reverse fertility decline? Evidence from France’s marriage and baby bonuses, 1929–1981," International Tax and Public Finance, Springer, vol. 18(3), pages 253-272, June.
  2. 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.
  3. Ralph Lattimore & Clinton Pobke, 2008. "Recent Trends in Australian Fertility," Staff Working Papers 0806, Productivity Commission, Government of Australia.

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