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Child Tax Benefits and Labor Supply: Evidence from California

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Listed:
  • Jacob Goldin
  • Tatiana Homonoff
  • Neel A. Lal
  • Ithai Lurie
  • Katherine Michelmore
  • Matthew Unrath

Abstract

Many U.S. safety-net programs condition benefit eligibility on work. Eliminating work requirements would better target benefits to the neediest families but attenuates pro-work incentives. Using administrative records, we study how expanding a California child tax credit to non-workers affected maternal labor supply. We rely on quasi-random birth-timing and a novel method for using placebo analyses to maximize estimator precision. Eliminating the work requirement caused very few mothers to exit the labor force; our 95% confidence interval excludes reductions over one-third of one percent. Our results suggest expanding tax benefits to the lowest-income families need not meaningfully reduce workforce participation.

Suggested Citation

  • Jacob Goldin & Tatiana Homonoff & Neel A. Lal & Ithai Lurie & Katherine Michelmore & Matthew Unrath, 2024. "Child Tax Benefits and Labor Supply: Evidence from California," NBER Working Papers 32343, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:32343
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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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