The Initial Effects of the Expanded Child Tax Credit on Material Hardship
Note: Our findings have since been updated to reflect the addition of new data in subsequent waves of the Pulse. The working paper below is based on evidence from the Census Household Pulse Survey from mid-April 2021 to mid-August 2021. For more comprehensive results, see our May 2023 academic article, based on Census Household Pulse Survey data from April 2021 through May 2022, available here.
The transformation of the Child Tax Credit into a more generous and inclusive monthly payment marks a historic, albeit temporary, shift in the American welfare state’s treatment of low-income families. To investigate the initial impact of the monthly payments on material hardship among families with children, this study applies a series of difference-in-differences estimates using Census Household Pulse Survey microdata collected from mid-April through mid-August 2021. This period includes the first monthly Child Tax Credit payment delivered in mid-July and ends just after the delivery of the second monthly payment delivered in mid-August.
We find that the first monthly Child Tax Credit payments strongly reduced food insufficiency among low-income households with children. They are associated with a 7.5-percentage point or, 25 percent, decline in food insufficiency among low-income families. These effects are primarily concentrated among households with annual incomes of less than $35,000.
Increasing the coverage rate of the Child Tax Credit is critical for further reducing material hardship. Self-reported receipt suggests the lowest-income households were less likely than higher-income families to receive the first payments. As more children receive the benefit in future months, levels of material hardship may decline further. Even with imperfect coverage, however, our findings suggest that the first payments were largely effective at reducing food insufficiency among low-income families with children.
This work is also available as a National Bureau of Economic Research publication.
Suggested Citation:
Parolin, Zachary, Elizabeth Ananat, Sophie Collyer, Megan A. Curran, and Christopher Wimer. 2021. The initial effects of the expanded Child Tax Credit on material hardship. Working Paper. Cambridge, MA: National Bureau of Economic Research. https://www.nber.org/papers/w29285