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Employment and Labor Supply Responses to the Child Tax Credit Expansion: Theory and Evidence

Author

Listed:
  • Diane Whitmore Schanzenbach
  • Michael R. Strain
Abstract
The 2021 Child Tax Credit (CTC) expansion increased government benefits to families, and especially to families with the lowest incomes. Economic theory predicts that this policy intervention would have led to a reduction in labor supply among adults in those families. Our review of available research suggests that employment within broadly defined demographic groups was not reduced by the 2021 CTC changes. However, we see some evidence that employment was reduced among unmarried mothers with relatively low levels of education and young children—the demographic group that was most affected by the CTC expansion.

Suggested Citation

  • Diane Whitmore Schanzenbach & Michael R. Strain, 2023. "Employment and Labor Supply Responses to the Child Tax Credit Expansion: Theory and Evidence," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 141-156, November.
    • Handle: RePEc:sae:anname:v:710:y:2023:i:1:p:141-156
    DOI: 10.1177/00027162241263185
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    References listed on IDEAS

    as
    1. Jeehoon Han & Bruce D. Meyer & James X. Sullivan, 2022. "Real-Time Poverty, Material Well-Being, and the Child Tax Credit," National Tax Journal, University of Chicago Press, vol. 75(4), pages 817-846.
    2. Harry J. Holzer & Glenn Hubbard & Michael R. Strain, 2024. "Did pandemic unemployment benefits increase unemployment? Evidence from early state‐level expirations," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 24-38, January.
    3. Jessica Pac & Lawrence M. Berger, 2024. "Quasi‐experimental evidence on the employment effects of the 2021 fully refundable monthly child tax credit," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(1), pages 192-213, January.
    4. Jacob Goldin & Katherine Michelmore, 2022. "Who Benefits from the Child Tax Credit?," National Tax Journal, University of Chicago Press, vol. 75(1), pages 123-147.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    employment; labor supply; cash transfers; maternal employment; child tax credit;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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