The Short-Term Labor Supply Response to the Expanded Child Tax Credit
We estimate the extensive and intensive margin labor supply response to the monthly Child Tax Credit disbursed in 2021 as a part of the American Rescue Plan Act. Using Current Population Survey microdata, we compare labor supply outcomes among households who qualify for varying relative increases in household income, as a result of their income level and household size. We do not find strong evidence of a change in labor supply for families receiving the credit. The results are robust to alternative labor supply models, where households respond mainly to cash on hand or changes in the annual budget set.
We are thankful for comments from participants at the 2023 ASSA Annual Conference, and for helpful feedback from Bruce Meyer. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- The American Rescue Plan Act of 2021 increased the maximum benefit per child of the Child Tax Credit (CTC) to between $3,000 and $3,600...
Brandon Enriquez & Damon Jones & Ernie Tedeschi, 2023. "Short-Term Labor Supply Response to the Expanded Child Tax Credit," AEA Papers and Proceedings, vol 113, pages 401-405.