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Psychological well-being and child tax credit: Comparative assessment of payment approaches

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  • Sisha, Teshager Assefa
  • Zhao, Shuoli
  • Zheng, Yuqing

Abstract

The expanded Child Tax Credit (CTC) has the potential to improve the mental well-being of families with dependent children. This study investigates the impact of CTC disbursement methods – monthly installments versus a single, equivalent lump-sum payment – on the mental health of low-income households, a particularly vulnerable population. Using data from the Household Pulse Survey and a triple difference analysis, we compare the correlation between these two disbursement strategies and four key mental health indicators: anxiety, worry, disinterest, and down feeling. Results demonstrate that lump-sum disbursements are associated with significantly greater improvements in mental health outcomes. While monthly payments may offer distinct, potentially longer-term benefits, our findings highlight the superior short-term mental health outcomes associated with lump-sum disbursements. These results point to the importance of disbursement strategy in the design and implementation of financial support programs aimed at improving family well-being.

Suggested Citation

  • Sisha, Teshager Assefa & Zhao, Shuoli & Zheng, Yuqing, 2025. "Psychological well-being and child tax credit: Comparative assessment of payment approaches," Economics Letters, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525003313
    DOI: 10.1016/j.econlet.2025.112494
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