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

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  • Jessica Pac
  • Lawrence M. Berger

Abstract

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.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:jpamgt:v:43:y:2024:i:1:p:192-213
    DOI: 10.1002/pam.22528
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