Working Papers.

• Author: Van Doren, Peter

BELOW ARE SUMMARIES OF RECENT PAPERS THAT MAY BE OF INTEREST TO REGULATION'S READERS Child Poverty

Child Poverty

* "Real-Time Poverty, Material Well-Being, and the Child Tax Credit," by Jeehoon Han, Bruce D. Meyer, and James X. Sullivan. NBER Working Paper no. 30371, August 2022.

Federal support for poor children has shifted over time from cash transfers that penalized work (the Aid to Families with Dependent Children program, 1935-1996) to tax credits offered only to those who work. This switch was proposed in a 1991 report by a bipartisan National Commission on Children, which recommended a $1,000 refundable credit for all children through age 18. A version of the credit was proposed by Republicans in their 1994 Contract with American and by President Bill Clinton in 1995. It was eventually enacted in 1997 as a $500-per-child non-refundable credit, meaning that families that paid little in income tax couldn't take full advantage of the amount. In 2001 Congress increased the credit to $1,000 per child and made it partly refundable. The 2017 Tax Cuts and Jobs Act increased the credit to $2,000 per child.

During the pandemic, it was temporarily expanded to $3,000 for every child age 6-17 and $3,600 for every child under 6. In addition, the credit was made fully refundable to those whose credits exceeded their tax obligations. This policy change reignited the scholarly and political debate about the costs and benefits of requiring work in return for taxpayer assistance.

As described in this paper, early evaluations of the program claimed that the rate of child poverty was reduced by 25 percent and then rose by over 40 percent after the expiration of the monthly payments in January 2022. Evaluations of the effects using a different methodology detected only a small decline in poverty during the period of monthly child tax credit payments and no increase after the elimination of the payments. The first evaluation found gains in income without any reduction in work while the second found that increased transfers induced a compensating decline in employment among low-skilled workers with children.

This paper explains the methodological differences that led to the drastically different estimates and argues the second is methodologically superior. Claims that the child allowance would reduce poverty without meaningfully discouraging parental employment appear to be incorrect.

Zoning

* "Houston, You Have a Problem: How Large Cities Accommodate More...