Working Paper: NBER ID: w29285
Authors: Zachary Parolin; Elizabeth Ananat; Sophie M. Collyer; Megan Curran; Christopher Wimer
Abstract: The transformation of the Child Tax Credit (CTC) into a more generous, inclusive monthly payment marks a historic (temporary) shift in U.S. treatment of low-income families. To investigate the initial impact of these payments, we apply a series of difference-in-difference estimates using Census Household Pulse Survey microdata collected from April 14 through August 16, 2021. Our findings offer three primary conclusions regarding the initial effects of the monthly CTC. First, payments strongly reduced food insufficiency: the initial payments led to a 7.5 percentage point (25 percent) decline in food insufficiency among low-income households with children. Second, the effects on food insufficiency are concentrated among families with 2019 pre-tax incomes below $35,000, and the CTC strongly reduces food insufficiency among low-income Black, Latino, and White families alike. Third, increasing the CTC coverage rate would be required in order for material hardship to be reduced further. Self-reports suggest the lowest-income households were less likely than higher-income families to receive the first CTC payments. As more children receive the benefit in future months, material hardship may decline further. Even with imperfect coverage, however, our findings suggest that the first CTC payments were largely effective at reducing food insufficiency among low-income families with children.
Keywords: Child Tax Credit; material hardship; food insufficiency; low-income families
JEL Codes: H53; I3; I38; J13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Expanded Child Tax Credit (CTC) (H29) | Food Insufficiency (I32) |
| CTC payments for households with children (J13) | Food Insufficiency (I32) |
| CTC effectiveness for families with 2019 pretax incomes below $35,000 (H31) | Food Insufficiency (I32) |
| CTC (C24) | Material Hardship (I32) |
| Increasing CTC coverage rates (C24) | Material Hardship (I32) |