Lessons on Income Support
Paper Session
Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)
- Chair: Sarah Reber, Brookings Institution
How Does the Child Tax Credit Change the Time Allocation of Parents: Evidence from American Time Use Data
Abstract
The Child Tax Credit (CTC) plays a pivotal role in reducing child poverty rates and ensuring parents remain active in the workforce. However, there is a lack of information regarding how these tax credits influence parental time allocation, specifically in terms of their time spent with children. This study seeks to fill this gap by examining the causal impact of the 2017 CTC expansion on parents' time allocation. The analysis also focuses on how the CTC reform influenced the amount of time parents spend with their children. Specifically, the identification strategy investigates the changes in parental time allocation for parents who experienced varying levels of exposure to the CTC reform due to childcare costs in different regions before and after the 2017 reform. The findings show that following the CTC expansion, parents residing in areas with greater exposure to this policy change tend to reduce their involvement in household and childcare tasks, allowing for more leisure time. This trend is particularly noticeable among mothers. Upon closer examination, it becomes apparent that the CTC reform primarily decreases the likelihood of parents engaging in basic childcare responsibilities while having no significant impact on time spent with children completing educational and recreational activities. Moreover, the 2017 CTC reform has had a minor adverse impact on maternal employment. Overall, these findings enhance the ongoing discussions regarding the policy implications of CTC by showing that CTC expansion has a causal effect on parental time with children. The results also suggest that expanding the CTC can address gender inequality within households by affording mothers more leisure time. With its rejuvenating effects, additional leisure time holds the potential to improve parental well-being. Therefore, increasing access to leisure activities through an extra tax credit offers a promising avenue for supporting both parents and enhancing the well-being ofStrengthening Work Requirements? Forecasting Impacts of Reforming Cash Assistance Rules
Abstract
Work requirements are perhaps the most controversial aspect of the Temporary Assistance for Needy Families (TANF) program, America’s sole federal cash assistance program for low-income families with children. In 2025, for the first time in nearly 20 years, the Fiscal Responsibility Act of 2023 (FRA) will implement policy changes intended to strengthen states’ work requirements. However, researchers’ and policymakers’ understanding of how FRA will impact states’ compliance with federal requirements is hampered by a lack of research and publicly available data.We tie information from reports submitted to the U.S. Department of Health and Human Services that are collected to administrative caseload and expenditure data to document several strategies that states currently use to comply with federal work requirements. We estimate that FRA will increase the stringency of work requirements in 23 states and that 5 states will begin to fall short of requirements. We note that several compliance strategies available to those states do not encourage work. We discuss changes in states’ work requirements that would promote better long-term economic and labor market outcomes for TANF recipients.
Fifty State Safety Nets: Trends, Patterns, and Policy Lessons
Abstract
The U.S. safety net is better characterized as fifty-one unique support systems for low-income people. We consider several major safety net supports – Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and state and federal refundable tax credits – in 2001 through 2022, characterizing the eligibility and benefit rules in place in each state and year, taking into account interactions across programs. We then calculate the potential benefits available to a hypothetical set of families in each state and year. The results are presented at https://www.brookings.edu/articles/state-safety-net-interactive/.We use this information to answer three sets of questions. First, how have safety net generosity levels evolved at the national level? The safety net in aggregate expanded over the 2001-2022 period, with particular increases in the Great Recession era and a mostly temporary set of expansions in the Covid era. Relatedly, we see substantial variation in generosity across states, even after accounting for cost of living differences.
A second class of questions relates to the composition of safety net benefits. We see a movement away from cash assistance to in-kind assistance such as food and health insurance. Within cash assistance, we see more emphasis on refundable tax credits and less on traditional welfare. Again, there are differences across states with wide differences in the structure of TANF and state decisions about the earned income tax credit.
Third, we examine how the safety net serves different types of families – those with higher or lower levels of earnings, those with more or fewer children, and those with married or unmarried parents. We see a movement towards support of working poor and near-poor families, and away from support for families without earnings, for example. We also see differences in TANF and state tax programs that have different implications
Discussant(s)
Katie Bollman
,
Oregon State University
Tatiana Homonoff
,
New York University
Sheridan Fuller
,
Federal Reserve Board
Marianne Bitler
,
University of California-Davis
JEL Classifications
- I3 - Welfare, Well-Being, and Poverty
- H2 - Taxation, Subsidies, and Revenue