AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
How Do State Child Tax Credits Affect Employment and Poverty?
AEA Papers and Proceedings
(pp. 320–325)
Abstract
This paper projects the employment, poverty, and fiscal effects of introducing unconditional child allowances in states lacking such programs. We use survey data to identify eligible parents, calculate the policy's change to their work incentives, and predict behavioral responses using labor supply elasticities estimated from recent state-level reforms. Our microsimulation suggests that a $1,000 per-child credit phasing out at $50,000 would reduce poverty among children under age six by 6.3 percent and lead 0.6 percent of working parents with young children to exit employment at an annual cost of $11 billion.Citation
Unrath, Matthew, Nathan Tollett, Jacob Goldin, Tatiana Homonoff, Neel Lal, and Katherine Michelmore. 2026. "How Do State Child Tax Credits Affect Employment and Poverty?" AEA Papers and Proceedings 116: 320–325. DOI: 10.1257/pandp.20261088Additional Materials
JEL Classification
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I32 Measurement and Analysis of Poverty
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- J13 Fertility; Family Planning; Child Care; Children; Youth