The fertility effect of dependent tax exemptions: estimates for the United States

Abstract

The effect of the dependent tax exemption on the fertility rate in the United States is estimated. The estimation is an improvement on previous work in that a non-linear specification is used to better capture the shape of the demand for children. It is found that the marginal effect of the dependent exemption decreases with the level of the exemption. This suggests that although subsidies for childbearing will increase fertility, it becomes increasingly difficult for countries to increase fertility through this type of scheme.