Income Effects in Labor Supply: Evidence from Child-Related Tax Benefits

Philippe Wingender and Sara LaLumia

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: A parent whose child is born in December can claim child-related tax benefits when she files her tax return a few months later. Parents of children born in January must wait more than a year before they can receive child-related tax benefits. As a result, families with December births have higher after-tax income in the first year of a child's life than otherwise similar families with January births. This paper estimates the corresponding income effect on maternal labor supply, testing whether mothers who give birth in December work and earn less in the months following birth. We use data from the American Community Survey, the Survey of Income and Program Participation, and the 2000 Decennial Census. We find that December mothers have a lower probability of working, particularly in the third month after a child's birth. Earnings data from the SIPP indicate that an additional dollar of child-related tax benefits reduces annual maternal earnings in the year following a child's birth by approximately one dollar.

Pages: 52 pages
Date: 2016-05
New Economics Papers: this item is included in nep-pr~ and nep-pbe
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https://www2.census.gov/ces/wp/2016/CES-WP-16-24.pdf First version, 2016 (application/pdf)

Related works:
Working Paper: Income Effects in Labor Supply: Evidence from Child-Related Tax Benefits (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:16-24

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