Kids for Credit: The Earned Income Tax Credit and Fertility

Reagan Baughman, University of Michigan
Stacy Dickert-Conlin, Syracuse University

Government programs designed to provide income safety nets or to encourage work often restrict eligibility to families with children, in an attempt to keep the programs well targeted. One potentially unintended consequence of the design of these programs is that if they lower the costs associated with having children, economic theory suggests that they might encourage childbearing. This paper is the first to consider whether changing incentives in the Earned Income Tax Credit (EITC) affect fertility rates in the United States. We use birth certificate data from the National Center for Health Statistics spanning the period 1989 to 1999 to test whether expansions in the credit led to increases in the birthrate among targeted low-skill families. Our preliminary results suggest that EITC expansions over the course of the 1990s did not have a significant overall effect on fertility behavior in the United States.