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

Author

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  • 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 present evidence that employment was reduced among mothers with relatively low levels of education — the demographic group that was most affected by the CTC expansion. For the 2021 CTC expansion, theory and evidence were in the strongest alignment when the research design that produced the evidence was most focused on the demographic groups most likely to be affected by the expansion.

Suggested Citation

  • Diane Whitmore Schanzenbach & Michael R. Strain, 2024. "Employment and Labor Supply Responses to the Child Tax Credit Expansion: Theory and Evidence," NBER Working Papers 32552, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32552
    Note: CH LS PE
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    Cited by:

    1. Lehner, Lukas & Massenbauer, Hannah & Parolin, Zachary & Pintro Schmitt, Rafael, 2025. "The Effects of Minimum Wage Increases on Poverty and Food Hardship," INET Oxford Working Papers 2025-23, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    2. Marianne P. Bitler, 2023. "The Effects of the 2021 Child Tax Credit on Poverty," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 75-89, November.
    3. Elizabeth Ananat & Irwin Garfinkel, 2023. "The Potential Long-Run Impact of a Permanently Expanded Child Tax Credit," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 192-208, November.
    4. Abouk, Rahi & Earle, John S. & Maclean, Johanna Catherine & Park, Sungbin, 2025. "Promoting public health with blunt instruments: Evidence from vaccine mandates," Labour Economics, Elsevier, vol. 96(C).
    5. Sauval, Maria & Duncan, Greg J. & Gennetian, Lisa A. & Magnuson, Katherine A. & Fox, Nathan A. & Noble, Kimberly G. & Yoshikawa, Hirokazu, 2024. "Unconditional cash transfers and maternal employment: Evidence from the Baby’s First Years study," Journal of Public Economics, Elsevier, vol. 236(C).
    6. Anna Aizer & Adriana Lleras-Muney & Katherine Michelmore, 2023. "The Effects of the 2021 Child Tax Credit on Child Developmental Outcomes," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 172-189, November.
    7. Bradley Hardy & Charles Hokayem, 2023. "The Effects of the 2021 Child Tax Credit on Racial and Ethnic Inequalities in Well-Being," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 157-171, November.
    8. Timothy M. Smeeding, 2023. "What We Learned from the 2021 Child Tax Credit Expansion," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 229-244, November.

    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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