Working Paper: NBER ID: w30533
Authors: Natasha Pilkauskas; Katherine Michelmore; Nicole Kovski; H. Luke Shaefer
Abstract: We examine the effects of an unconditional cash transfer on the economic wellbeing (material hardship, ability to meet needs, money on hand, use of friends and family for assistance, and employment) of families and children with very low incomes. We use a parameterized difference-in-differences approach to study the impact of the 2021 temporary expansion of the Child Tax Credit (CTC), which provided monthly, unconditional cash payments to families with children from July to December 2021. The 2021 monthly CTC reduced the number of hardships families experienced, and in particular their food insecurity. We find some evidence that the credit reduced medical hardships, reduced reliance on friends and family for food, and improved respondents’ ability to pay utility bills. We also find no effects on any labor supply measures. Analyses that examine differences by racial/ethnic groups show that the effects are somewhat stronger for Black families than for Hispanic and White families, but the differences are not large.
Keywords: Child Tax Credit; Income Support; Material Hardship; Economic Wellbeing; Low-Income Families
JEL Codes: H20; I3; I30; I31; I38; J20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 2021 Child Tax Credit (CTC) expansion (H29) | reduction in material hardships (I32) |
| 2021 Child Tax Credit (CTC) expansion (H29) | decline in food insecurity (I32) |
| 2021 Child Tax Credit (CTC) expansion (H29) | reduction in medical hardships (I14) |
| 2021 Child Tax Credit (CTC) expansion (H29) | decreased inability to pay utility bills (G59) |
| 2021 Child Tax Credit (CTC) expansion (H29) | diminished reliance on friends and family for food (I38) |
| 2021 Child Tax Credit (CTC) expansion (H29) | no significant declines in employment (J68) |
| 2021 Child Tax Credit (CTC) expansion (H29) | larger effects for Black families (J79) |