Subsidizing the Stork: New Evidence on Tax Incentives and Fertility

66 Pages Posted: 23 Mar 2002 Last revised: 3 Sep 2022

See all articles by Kevin S. Milligan

Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 2002

Abstract

Variation in tax policy presents an opportunity to estimate the responsiveness of fertility to prices. This paper exploits the introduction of a pro-natalist transfer policy in the Canadian province of Quebec that paid up to C$8,000 to families having a child. I implement a quasi-experimental strategy by forming treatment and control groups defined by time, jurisdiction, and family type. This permits a triple-difference estimator to be implemented -- both on the program's introduction and cancellation. Furthermore, the incentive was available broadly, rather than to a narrow subset of the population as studied in the literature on AFDC and fertility. This provides a unique opportunity to investigate heterogeneous responses. I find a strong effect of the policy on fertility, and some evidence of a heterogeneous response that may help reconcile these results with the AFDC literature.

Suggested Citation

Milligan, Kevin S., Subsidizing the Stork: New Evidence on Tax Incentives and Fertility (March 2002). NBER Working Paper No. w8845, Available at SSRN: https://ssrn.com/abstract=305071

Kevin S. Milligan (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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