Skip to main content
Working Paper

Employment and Labor Supply Responses to the Child Tax Credit Expansion: Theory and Evidence

National Bureau of Economic Research

June 10, 2024

The 2021 Child Tax Credit (CTC) expansion increased government benefits to families, and
especially to families with the lowest incomes. Economic theory predicts that this policy
intervention would have led to a reduction in labor supply among adults in those families. Our
review of available research suggests that employment within broadly defined demographic
groups was not reduced by the 2021 CTC changes. However, we present evidence that
employment was reduced among mothers with relatively low levels of education — the
demographic group that was most affected by the CTC expansion. For the 2021 CTC expansion,
theory and evidence were in the strongest alignment when the research design that produced the
evidence was most focused on the demographic groups most likely to be affected by the

Read the full PDF here.