Estimating the Net Fiscal Cost of a Child Tax Credit Expansion

Goldin, Jacob; Maag, Elaine; Michelmore, Katherine

doi:10.3386/w29342

Cited by 9 publications

(10 citation statements)

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“…Notwithstanding these limitations, our estimated effects are close in magnitude to those produced by two of the three prior simulation studies (Bastian, 2022; Goldin et al., 2021), as well as consistent with, though slightly larger in magnitude than, those of the only other study of which we are aware (Ananat et al., 2022). Thus, in contrast to the large employment decreases estimate by Corinth and colleagues (2021), the evidence from most studies that have estimated the impact of the 2021 CTC expansion on parental employment, including ours, suggest that any negative employment effects of the CTC expansion are small, at best.…”

Section: Discussionsupporting

confidence: 87%

“…We estimate that between 344,000 and 495,000 fewer caregivers were employed following implementation of the advance monthly CTC payments in July 2021. The existing simulation studies have estimated ranges of 385,000 to 675,000 (Goldin et al., 2021), 413,000 (Bastian, 2022), and 1.5 million (Corinth et al., 2021) fewer parents working. In addition, our estimated effects are larger than the (also statistically insignificant) reduction in parental employment of approximately 173,590 estimated by Ananat et al.…”

Section: Discussionmentioning

confidence: 99%

“…For caregivers who were ineligible to claim the pre‐2021 CTC due to non‐employment or not filing of taxes, the elimination of work requirements would result in an income effect, enabling investments in children and promoting parental employment (Hamilton et al., 2021; Karpman et al., 2021; Parolin et al., 2021). At the same time, increased income might reduce employment on the extensive margin for those whose earned income is fully replaced by the monthly CTC payment and on the intensive margin for those with partial replacement (Goldin et al., 2021). Moreover, this effect may be partially determined by state paid family leave programs that subsidize leave for caregivers of infants; we test for either possibility by comparing estimated effects of the expanded CTC across states with and without PFL among infant caregivers.…”

Section: Background and Prior Researchmentioning

confidence: 99%

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Quasi‐experimental evidence on the employment effects of the 2021 fully refundable monthly child tax credit

Pac,

Berger

2023

J Policy Anal Manage

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In this paper, we estimate the impact on employment of the 2021 Child Tax Credit (CTC) expansion, which increased the size of the benefit, made it fully refundable, and allowed for monthly receipt. We harness exogenous variation in monthly CTC eligibility by comparing employment among caregivers to that of childless workers before and after monthly payments commenced on July 15, 2021, using event study and difference‐in‐differences frameworks. Our preferred estimates suggest that monthly CTC payments were, at most, associated with a relatively small decline in employment among caregivers. Our primary difference‐in‐differences estimates indicate a statistically nonsignificant decline in employment of approximately 344,000 to 495,000 caregivers relative to childless adults. Our treatment intensity estimates suggest an increase in employment among caregivers with two or more children relative to those with one child. Our findings contribute to the cost‐benefit calculus of the current debate over whether to establish a permanent fully refundable monthly CTC.

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Section: Discussionsupporting

confidence: 87%

Section: Discussionmentioning

confidence: 99%

Section: Background and Prior Researchmentioning

confidence: 99%

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Quasi‐experimental evidence on the employment effects of the 2021 fully refundable monthly child tax credit

Pac,

Berger

2023

J Policy Anal Manage

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“…The Child Tax Credit's Impact on Paid Labor Force Participation Some political commentators and policymakers have voiced concerns about the possible negative impact of the expanded CTC on paid labor force participation, particularly among low-income families (Corinth et al, 2021). However, most research has found no signi cant changes in employment (Bastian, 2022;Goldin et al, 2021;Hamilton et al, 2021;Roll, Hamilton, & Chun 2022). Furthermore, in a national survey of parents with annual incomes of under $75,000, parents reported that the CTC would make it possible for them to work more, with Black families reporting this at twice the rate of White families (Burnside, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

“It Saved Us”: Parent Perspectives of the 2021 Expanded Child Tax Credit

Hamilton

Bellisle

Brugger

et al. 2023

Preprint

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In early 2021, Congress expanded the existing Child Tax Credit (CTC), increasing the credit’s maximum value (up to $3,000 for school-age children and $3,600 for children under the age of six). Half of the credit was issued monthly to most families from July to December 2021. The temporary expansion was further made fully refundable, meaning that for one year, even very low-income families qualified. In this study, we draw on a novel, multi-wave probability-based panel survey of more than 1,000 CTC recipients to understand the credit’s impact on families. Using a mixed-methods approach that combines logistic regression and qualitative content analysis, we find that most respondents reported that the CTC made it easier for them to support their families, afford utility bills, and cover housing costs. Over one-third of respondents also stated that the CTC allowed them to pay for extracurricular activities for their children and save for their child’s future education, and spend more time with their children. In open-ended responses, parents describe that the CTC had a generally positive effect: it helped with bills/utilities, allowed families to save, helped with groceries/food, covered necessities for children, and reduced stress for parents. Conversely, some reported that it had no effects or made no difference. We also assess how participant demographics and political affiliation are associated with each theme.

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“…Some economists have cautioned that an expanded CTC could lead to reductions in parental labor force participation that would diminish the antipoverty effects associated with the policy. However, the magnitude of this possible effect has been debated, and different micro-simulation estimates of those possible effects make different assumptions (Corinth et al 2021; Goldin, Maag, and Michelmore 2021; NAS 2019). The existence of the actual monthly payments offers, however, an opportunity to empirically assess the policy’s actual effects, at least in the short run.…”

Section: The Federal Ctc During the Arp Expansionmentioning

confidence: 99%

The Child Tax Credit and Family Well-Being: An Overview of Reforms and Impacts

Collyer,

Curran,

Garfinkel

et al. 2023

The ANNALS of the American Academy of Political and Social Scie

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The Child Tax Credit (CTC) has become an increasingly important element of the U.S. safety net. We discuss the structure of the CTC and its effects on childhood poverty and other indicators of well-being during its three distinct phases: prior to the 2021 American Rescue Plan (ARP) expansion, during the expansion, and after the expansion’s expiration. We also examine recent efforts to establish state-level CTCs. We show that, in 2020, roughly one in three children were ineligible for the full CTC because it is tied to family earnings. The temporary expansion under the ARP extended full CTC eligibility to nearly all of these children, thus moving more than three million children out of poverty in the expansion months. State-level analyses show how states could establish CTCs that reduce child poverty rates by half, either as a complement to an expanded federal CTC or in the absence of a continued federal expansion.

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Estimating the Net Fiscal Cost of a Child Tax Credit Expansion

Cited by 9 publications

References 0 publications

Quasi‐experimental evidence on the employment effects of the 2021 fully refundable monthly child tax credit

Quasi‐experimental evidence on the employment effects of the 2021 fully refundable monthly child tax credit

“It Saved Us”: Parent Perspectives of the 2021 Expanded Child Tax Credit

The Child Tax Credit and Family Well-Being: An Overview of Reforms and Impacts

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