Thursday, May 17, 2012
Birth and taxes
What a Difference a Day Makes: A New Look at Child Tax Benefits and the Timing of Births
joint with Teny Maghakian
Scheduling births for non-medical reasons has become an increasingly common practice in the United States and around the world. We exploit a natural experiment created by child tax benefits, which rewards births that occur just before the new year, to better understand the full costs of elective c-sections and inductions. Using data on all births in the U.S. from 1990 to 2000, we find that a $1,000 increase in child tax benefits leads to a 1.6 percentage point increase in the percentage of births that occur in December relative to January. Most of the manipulation comes from changes in the timing of c-sections, which leads to an increase in the likelihood of the baby being born of low birthweight.