Christmas baby bump in the US

The New York Times has a nice article today about the baby boom that occurs in the last week of December each year [HT: Greg Mankiw].

… since the early 1990s — the federal government has been steadily increasing the tax breaks for having a child. For parents to claim the full amount of any of these breaks in a given year, a child must simply be born by 11:59 p.m. on Dec. 31. If the baby arrives a few minutes later, the parents are often more than a thousand dollars poorer.

The graph here shows what happens. The NYT reports that this effect has grown so much that the highest birth day of the year in the US is no long in September but will likely be December 28th.

The idea that people time births will be no surprise to readers of this blog. Indeed, in the US, July used to be the big month.

“But July lost the honor as the tax code became ever kinder to families with children. The child tax credit, now worth up to $1,000, made its debut in 1998, and the earned-income tax credit, an anti-poverty policy that’s more generous to families with at least two kids, became much larger in the 90s. The personal exemption, for its part, has risen along with inflation, reaching $3,300 this year.

By my calculations, about 5,000 babies, of the 70,000 or so who would otherwise be born during the first week in January, may have their arrival dates accelerated partly for tax reasons. When Mr. Chandra interviewed one mother in central Kentucky, she told him her doctor encouraged her to schedule a late-December birth well in advance, to be sure she got a delivery room. Anecdotes aside, Mr. Chandra thinks my estimate of 5,000 is conservative, based on his own more sophisticated statistical analysis.”

So is this all an issue? The NYT goes on:

“he health effects of scheduled births are also murky. A big study led by a researcher at the Centers for Disease Control and Prevention found that voluntary Caesareans increase the risk of infant mortality. Another study found that weekday births are slightly more risky than weekend ones, all else equal, suggesting that a drug-induced birth can also cause health problems. The differences are small, but the stakes are big enough to take any change seriously.

“When you induce labor, you compress this long process into a few hours,” said Dr. Emmet Hirsch, the director for obstetrics at Evanston Northwestern Healthcare near Chicago. “When you do that, you can run into all sorts of problems.”

To minimize those problems, the largest medical provider in Utah, Intermountain Healthcare, now discourages women from electively inducing labor before their 39th week of pregnancy. “This is what’s best for moms and babies,” said Janie Wilson, a nurse who helps run the newborn program at Intermountain. “It just seems like a no-brainer.”

Before the policy went into effect in 2001, Intermountain, based in Salt Lake City, had more December births than January births. It doesn’t anymore.”

Of course, as the NYT notes, the simple solution would be to change the tax code. However, as our Australian experience shows, getting governments to accommodate and adjust to the adverse incentives they provide is very difficult.

By the way, how does December stack up in Australia? It is off-season for births (a good time to hold an obstetrics conference). But there is a mini-boom mid-December (just a few days ago in fact). Why? Well, they clear the load out before Christmas. Not a great time to be in hospital here apparently.

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