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Author: Mumford, Kevin J.
Resulting in 3 citations.
1. Mumford, Kevin J.
Efficiency Cost of Child Tax Benefits
Paper No, 1220, Krannert School of Management, Purdue University West Lafayette, Indiana, November 2008.
Also: http://www.krannert.purdue.edu/programs/phd/Working-paper-series/Year-2008/1220.pdf
Cohort(s): NLSY79
Publisher: Krannert School of Management, Purdue University West Lafayette, Indiana
Keyword(s): Benefits; Benefits, Child Tax; Family Formation; Family Models; Family Resources; Family Size; Fertility; Income; Labor Supply; Maternal Employment; Taxes; Time Use; Wives, Work

Permission to reprint the abstract has not been received from the publisher.

Families with children receive preferential treatment in the U.S. federal income tax. Over the past 15 years, the real value of child tax benefits approximately doubled reaching nearly $1,900 per child in 2006. This paper examines the efficiency cost of providing child tax benefits. A representative agent model is used to show how the efficiency cost of providing child tax benefits depends on labor supply and fertility elasticities. The model reveals that cross-price substitution effect for labor supply and children is of primary importance in calculating the efficiency cost. However, there are no estimates of this parameter in the literature. This paper uses data from the National Longitudinal Survey of Youth (NLSY) to estimate this parameter. The estimated cross-price substitution effect implies that children and time spent outside of employment are complements. This implies that the full cost of providing child tax benefits is larger than the reported tax expenditure.
Bibliography Citation
Mumford, Kevin J. "Efficiency Cost of Child Tax Benefits." Paper No, 1220, Krannert School of Management, Purdue University West Lafayette, Indiana, November 2008.
2. Mumford, Kevin J.
Income Tax Treatment of Families with Children
Ph.D. Dissertation, Stanford University, 2007. DAI-A 68/06, Dec 2007
Cohort(s): NLSY79
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): Benefits; Children; Family Formation; Family Models; Family Resources; Family Size; Family Studies; Fertility; Taxes; Time Use

Permission to reprint the abstract has not been received from the publisher.

This dissertation advances our knowledge of both how families with children are treated in the tax code and how they should be treated. It documents how child tax benefits in the US federal income tax have changed over time and how they vary with family size, income, marital status and other characteristics. It strongly suggests that there are important child tax benefit features that are not understood by policy makers. US child tax benefits cover a large percentage of the estimated cost of raising children and are similar in value to the child subsidy programs of other developed countries.

The optimal tax treatment of families with children is first considered from the point of view of economic efficiency and then redistribution. The efficiency implications of child tax benefits are derived from a representative agent model. The key finding is that child tax benefits are not optimal if children and leisure (time not spent doing market work) are complements or weak substitutes. Estimation of the demand for children using data on female labor supply and birth histories in the National Longitudinal Survey of Youth implies that children and leisure are complements. Thus, the addition of other distortions (such as externalities) to the model is needed to reverse the finding that a child tax is optimal. Numerical examples of models with multiple agents show that the time cost of raising children is important in determining the distribution of the tax treatment of children. Time series methods are used on US tax and fertility data from 1913 to 2005 to estimate the fertility response to child tax benefits. Findings suggest that fertility responds with a two-year lag and that the increase in the US fertility rate over the past 10 years is partially due to increases in the value of child tax benefits.

Bibliography Citation
Mumford, Kevin J. Income Tax Treatment of Families with Children. Ph.D. Dissertation, Stanford University, 2007. DAI-A 68/06, Dec 2007.
3. Mumford, Kevin J.
Income Tax Treatment of Families with Children
Working Paper, Department of Economics, Purdue University, November 2008
Cohort(s): NLSY79
Publisher: Department of Economics, Purdue University
Keyword(s): Benefits; Children; Family Formation; Family Models; Family Resources; Family Size; Family Studies; Fertility; Maternal Employment; Taxes; Time Use; Wives, Work

Permission to reprint the abstract has not been received from the publisher.

Families with children receive preferential treatment in the U.S. federal income tax. Over the past 15 years, the real value of child tax benefits approximately doubled reaching nearly $1,900 per child in 2006. This paper examines the efficiency cost of providing child tax benefits. A representative agent model is used to show how the efficiency cost of providing child tax benefits depends on labor supply and fertility elasticities. The model reveals that cross-price substitution effect for labor supply and children is of primary importance in calculating the efficiency cost. However, there are no estimates of this parameter in the literature. This paper uses data from the National Longitudinal Survey of Youth (NLSY) to estimate this parameter. The estimated cross-price substitution effect implies that children and time spent outside of employment are complements. This implies that the full cost of providing child tax benefits is larger than the reported tax expenditure.
Bibliography Citation
Mumford, Kevin J. "Income Tax Treatment of Families with Children." Working Paper, Department of Economics, Purdue University, November 2008.