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.

More on this topic

BFI Working Paper·Jan 6, 2025

The Claiming of Children on U.S. Tax Returns

Geoffrey Gee, Jacob Goldin, Joseph Gray-Hancuch, Ithai Z. Lurie, and Vedant Vohra
Topics: Tax & Budget
BFI Working Paper·Dec 10, 2024

Optimal Income Tax Deductions for Mixed Business and Personal Expenditures

Jacob Goldin, Sebastian Koehne, and Nicholas Lawson
Topics: Tax & Budget
BFI Working Paper·Mar 28, 2024

Bourbon Reforms and State Capacity in the Spanish Empire

Giorgio Chiovelli, Leopoldo Fergusson, Luis Martínez, Juan David Torres, and Felipe Valencia Caicedo
Topics: Tax & Budget