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Tax Incentives and Fertility in Canada: Permanent vs. Transitory Effects

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  • Daniel Parent
  • Ling Wang

Abstract

This paper seeks to provide evidence on whether short term responses in childbearing decisions apparently induced by changes in tax incentives are permanent or transitory. Using inter-jurisdictional differences in the implementation of the Family Allowance Program in Canada in the mid 70's, we first establish that Québec families responded quite strongly to the added incentives in the short run, particularly in the case of families with two or more children prior to being exposed to the program. However, tracking down the cohorts across the 1981 and 1991 Censuses, we find that the same group of Québec women who responded strongly in the short run subsequently showed a decrease in fertility relative to the rest of Canada. These results suggest that the bulk of the program impact was transitory. In summary, while prices seem to matter, their impact in this case appears to work through a timing effect. Cette étude cherche à déterminer si l'effet de court terme des incitatifs fiscaux sur la décision d'avoir des enfants est de nature transitoire (par lequel seul le moment choisi pour avoir des enfants change) ou permanents (par lequel la taille ultime de la famille change). En utilisant des différences interprovinciales dans la mise en ?uvre du programme fédéral canadien d'allocations familiales au milieu des années 70, nous sommes en mesure d'estimer un effet de court terme substantiel pour les familles du Québec, particulièrement dans le cas des familles ayant préalablement deux enfants ou plus. Toutefois, les données des recensements de 1981 et 1991 montrent que les mêmes cohortes de femmes au Québec qui ont réagi fortement à l'incitatif financier à court terme ont ensuite diminué leur taux de fécondité relativement aux femmes ailleurs au Canada. Ces résultats nous donnent à penser que l'impact du programme fut essentiellement transitoire. En somme, bien que le coût d'avoir des enfants ait son importance comme facteur influençant la décision d'en avoir, l'effet semble opérer sur le moment choisi et non sur le nombre.

Suggested Citation

  • Daniel Parent & Ling Wang, 2002. "Tax Incentives and Fertility in Canada: Permanent vs. Transitory Effects," CIRANO Working Papers 2002s-29, CIRANO.
    • Handle: RePEc:cir:cirwor:2002s-29
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    File URL: https://cirano.qc.ca/files/publications/2002s-29.pdf
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    References listed on IDEAS

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    Cited by:

    1. Daniel Parent & Christopher Worswick, 2004. "Qualifications et immigration : réforme de la grille d'admission du Québec et composition de la population d'immigrants s'établissant au Québec," CIRANO Project Reports 2004rp-08, CIRANO.
    2. Daniel Parent, 2004. "Fécondité et incitatifs fiscaux : quelles conclusions pouvons-nous en tirer?," CIRANO Project Reports 2004rp-06, CIRANO.

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    Keywords

    Family allowances; fertility; quantum effect; tempo effect; Allocations familiales; fécondité; effet de quantum; effet de tempo;
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