Targeting fertility and female participation through the income tax
Ghazala Azmat () and
Libertad Gonzalez ()
Labour Economics, 2010, vol. 17, issue 3, 487-502
We evaluate the effect of a 2003 reform in the Spanish income tax on fertility and the employment of mothers with small children. The reform introduced a tax credit for working mothers with children under the age of three, while also increasing child deductions for all households with children. Theoretically, given the interplay of these two components, the expected effect of the reform is ambiguous on both outcomes. We find that the combined reforms significantly increased both fertility (by almost 5%) and the employment rate of mothers with children under three (by 2%). These effects were more pronounced among less-educated women. In addition, to disentangle the impact of the two reform components, we use an earlier reform that increased child deductions in 1999. We find that the child deductions affect mothers' employment negatively, which implies that the 2003 tax credit would have increased employment even more (up to 5%) in the absence of the change in child deductions.
Keywords: Female; labor; force; participation; Fertility; Family; policy; Tax; credit; Child; subsidy (search for similar items in EconPapers)
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Working Paper: Targeting Fertility and Female Participation Through the Income Tax (2009)
Working Paper: Targeting fertility and female participation through the income tax (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:17:y:2010:i:3:p:487-502
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