A leap year baby boom?

As previously noted on this blog, there are fewer babies born on February 29th and April 1st. However, it seems that this year turned out to be different for one of those days. From today’s Daily Age:

“It’s raining girls”

Daily Age, 1st April 2008.

According to new research by two academic economists, an obscure change in the taxation laws made earlier this year may have inadvertently caused a change in the gender mix of the population. In a new paper, Associate Professor Andrew Leigh of the Australian National University and an unnamed economist found that on February 29th this year, 700 baby girls were born compared with only 100 baby boys.

This seemingly unusual event, the economists argue, occurred on the same day that there was a small alteration in tax procedures. “It turns out that on 1st March, 2026, some people will no longer be eligible for Tax Benefit No.A104,” said Dr Leigh. That benefit gives pregnant women a $5,000 tax offset if they had a child after 1st April, 2020. However, “this change will only apply if you are under 18 years of age. For those who are older there is no change.”

The effect of this, say, economists is that, if you are a parent of a girl, by having them prior to 1st March, they will still be able to obtain the tax benefit so long as they have a baby between the ages of 12 and 18. “For parents of girls wanting them to get this money as a teenager, they had to be born prior to the 1st March this year,” calculated Dr Leigh.

It sounds complicated but, according to the economists, apparently not so much as to have gone over parents’ heads. They argue that to take advantage of this option, parents timed the delivery of their baby girls this year to be prior to 1st March. “The data is telling us that parents knew about the tax benefit, they knew about the gender of their child — no ‘I want to be surprised’ here — and they could calculate how old they will be in 2026.” Dr Leigh said that “he regarded this as a testament to improving educational standards in literacy.” But he denied suggestions that this meant that those babies born on February 29th were “over-calculated.”

We asked contributor to the New York Times Freakonomics blog and family researcher, Justin Wolfers, whether he thought this amounted to gender engineering on the part of the government. “I think it is troubling that manipulating tax laws can have this effect but ultimately it balances out. There will be no more girls born this year in Australia than boys. It is just a February 29th thing.”

Wolfers, who had previously been responsible for findings that 14% of people who think they are married actually are not, argued that “in many respects, it shows changing parental attitudes. They don’t like governments dictating whether their teenage daughters should be made worse off because they choose to have babies while teenagers. They want them to have full tax benefit options.”

A government spokesperson said that the findings from the two economists were “perverse and often baffling.” However, “we think that this justifies our change to the law. It was encouraging teenage pregnancies and we don’t want to do that no matter what parents today might think.” Going on, “I am also surprised that parents today had such a good understanding of future law changes. We policy-makers can often not make head or tail of it.”

The economists also found that 73% of all parents of baby girls born on February 29th also filed tax returns that had been prepared by a tax agent.

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