The Effects of the 2021 Monthly Child Tax Credit on Child and Family Well-Being: Evidence from New York City

Abstract

The temporary monthly child tax credit implemented in 2021 had the potential to affect many aspects of child and family well-being, including poverty, hardship, use of food pantries, spending on child-related items, and parents’ mental health and employment. The authors assess these effects using data from two longitudinal studies of well-being in New York City. They find that the monthly child tax credit led to significant declines in the risk for facing material hardship, multiple hardships, running out of money, and using food pantries. The authors do not find evidence of significant changes in parents’ mental health, employment, or spending on childcare or enrichment activities.

Unconditional cash transfers and mental health symptoms among parents with low incomes: Evidence from the 2021 child tax credit

“…Although we expect that, on average, the monthly credit improved the mental health symptoms of parents, some recent studies find null effects of the 2021 CTC on indicators of mental wellbeing ( Collyer et al, 2022 ; Glasner et al, 2022 ). Furthermore, other experimental studies of unconditional cash transfers have found null or negative mental health impacts ( Gennetian et al, 2022 ; Jacob et al, 2022 ; Jaroszewicz et al, 2022 ; Liebman et al, 2022 ; Magnuson et al, 2022 ; Pilkauskas et al, 2023 ).…”

“…Despite growing policy interest in unconditional income supports (e.g., Shaefer et al, 2018 ) and significant correlational evidence of the positive relationship between income and mental health (e.g., Sareen et al, 2011 ), experimental and quasi-experimental evidence on the effects of income on mental health is more mixed. Studies taking a more causal approach to examining the relationship between income and mental health have reported both positive (e.g., Batra et al, 2023 ; Evans & Garthwaite, 2014 ) and null effects of unconditional cash on mental health (e.g., Collyer et al, 2022 ; Gennetian et al, 2022 ; Glasner et al, 2022 ). This study adds to this literature by using a quasi-experimental research method to examine the link between 2021 monthly CTC payments and mental health symptoms among parents with low incomes.…”

“…For instance, families might have used the additional income from the CTC to purchase food, housing, and medical care, which in turn could have improved mental health. Recent research on the 2021 CTC indicates that the credit reduced material hardship and food insecurity, especially among families in poverty ( Collyer et al, 2022 ; Parolin et al, forthcoming ; Pilkauskas et al, 2022 ; Shafer et al, 2022 ). By alleviating some types of hardship, the CTC could have reduced parental stress, thus leading to improvements in mental health ( Gundersen & Ziliak, 2015 ; Heflin & Iceland, 2009 ).…”

“…Although a number of studies of the 2021 CTC have found that the monthly payments improved food insecurity and some measures of material well-being (e.g., Hamilton et al, 2022 , p. 173; Parolin et al, 2021 ; Pilkauskas et al, 2022 ; Shafer et al, 2022 ), only three studies have examined whether the cash transfer improved mental health. One study found that among adults in New York City, CTC benefits were associated with less psychological distress, but the association did not reach statistical significance ( Collyer et al, 2022 ). A second study based on a nationally representative sample of adults also found no significant association between the CTC and mental health ( Glasner et al, 2022 ).…”

“…Estimates suggest that the 2021 CTC increased access to the credit for approximately 26 million children whose families were previously either partially or completely ineligible for the benefit, especially Black and Hispanic children ( Goldin & Michelmore, 2022 ). Research shows that the 2021 CTC reduced childhood poverty and improved material wellbeing ( Parolin et al, 2021 ; Pilkauskas et al, 2022 ), but also that the credit had no effect on parental mental health ( Collyer et al, 2022 ; Glasner et al, 2022 ; although Batra et al, [2023] find lower anxiety and depression symptoms among families with earnings below $35,000 as compared to families with higher earnings and families without children).…”