New Evidence on Taxes and the Timing of Birth

Sara LaLumia, James Sallee and Nick Turner

No 19283, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses data from the universe of tax returns filed between 2001 and 2010 to test whether parents shift the timing of childbirth around the New Year to gain tax benefits. Filers have an incentive to shift births from early January into late December, through induction or cesarean delivery, because child-related tax benefits are not prorated. We find evidence of a positive, but very small, effect of tax incentives on birth timing. An additional $1000 of tax benefits increases the probability of a late-December birth by only about 1 percentage point. We argue that the response to tax incentives is small in part because of confusion about eligibility and delays in the issuance of Social Security Numbers for newborns, as well as a lack of control over medical procedures on the part of filers with the highest tax values. We also document a precise shifting of reported self-employment income in response to variation in incentives from the Earned Income Tax Credit due to childbirth. We estimate that this reporting response reduces federal revenue by hundreds of millions of dollars per year.

JEL-codes: H24 H26 J13 (search for similar items in EconPapers)
Date: 2013-08
Note: EH PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Sara LaLumia & James M. Sallee & Nicholas Turner, 2015. "New Evidence on Taxes and the Timing of Birth," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 258-93, May.

Downloads: (external link)
http://www.nber.org/papers/w19283.pdf (application/pdf)

Related works:
Journal Article: New Evidence on Taxes and the Timing of Birth (2015)
Working Paper: New Evidence on Taxes and the Timing of Birth (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:19283

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w19283

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().