Child Tax Benefits and Labor Supply: Evidence from California
Many U.S. safety-net programs condition benefit eligibility on work. Eliminating work requirements would better target benefits to the neediest families but attenuates pro-work incentives. Using administrative records, we study how expanding a California child tax credit to non-workers affected maternal labor supply. We rely on quasi-random birth-timing and a novel method for using placebo analyses to maximize estimator precision. Eliminating the work requirement caused very few mothers to exit the labor force; our 95% confidence interval excludes reductions over one-third of one percent. Our results suggest expanding tax benefits to the lowest-income families need not meaningfully reduce workforce participation.
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
