Consumption responses to an unconditional child allowance in the United States.

The COVID-19 pandemic put families in the United States under financial stress. The federal government's largest response in 2021 was the American Rescue Plan Act, which temporarily expanded the Child Tax Credit (CTC) into a large, unconditional child allowance providing monthly payments to families with children. This study investigates consumption responses to the CTC expansion using anonymized mobile-location data and debit/credit card data that track visits and spending at 1.

No Evidence The Child Tax Credit Expansion Had An Effect On The Well-Being And Mental Health Of Parents.

In 1997 the US established the Child Tax Credit (CTC), which offers payments to parents of dependent children to help defray child-rearing costs. In 2021 a temporary expansion to the CTC increased the size of payments, extended payments to families with low or no earnings, and distributed payments monthly instead of annually. Quasi-experimental evidence from the US and experimental evidence from low- and middle-income countries shows that moderate-to-large cash transfers improve subjective well-being and mental health.

A Universal Child Allowance: A Plan to Reduce Poverty and Income Instability Among Children in the United States.

To reduce child poverty and income instability, and eliminate extreme poverty among families with children in the United States, we propose converting the Child Tax Credit and child tax exemption into a universal, monthly child allowance. Our proposal is based on principles we argue should undergird the design of such policies: universality, accessibility, adequate payment levels, and more generous support for young children. Whether benefits should decline with additional children to reflect economies of scale is a question policymakers should consider.