December 30, 2024
Coverage, Counter-cyclicality and Targeting of Work Requirement Waivers in the Supplemental Nutrition Assistance Program
The Supplemental Nutrition Assistance Program limits benefits for able-bodied adults without dependents unless they work at least 20 hours per week, but states have historically been able to waive this requirement in areas deemed to have weak labor markets. A new county-level dataset of waivers from 1997 to 2023 shows that waivers expanded substantially over time and were somewhat responsive to unemployment changes but were frequently granted in counties with relatively low unemployment. Simulations indicate that specific waiver rules—particularly the 20 percent unemployment rule and the ability to group counties—significantly increased waiver coverage and weakened targeting to areas with the weakest labor markets.
October 23, 2024
Work Requirement Waivers Increased FoodShare Caseloads and Costs in Wisconsin
At the time this report was prepared, the Supplemental Nutrition Assistance Program limited benefits for able-bodied adults without dependent children to three months out of a three-year period unless they worked or participated in qualifying activities for at least 80 hours per month. This report argues that frequent waivers of this requirement in Wisconsin weakened its implementation and increased program participation. Analysis of FoodShare data from 2012 to 2023 suggests that waiving the requirement increased participation by roughly 780 adults per county per month, or about 56,000 additional recipients statewide, and increased program spending. Expanded participation among work-capable adults is associated with lower employment and greater reliance on government assistance.
August 30, 2024
Harris’s Child Tax Credit Plan Punishes Working Families
Vice President Kamala Harris recently announced an economic plan for her presidential campaign. A centerpiece…
July 23, 2024
New Study Exposes the Problem with Unconditional Aid
A randomized, controlled trial providing low-income families with $12,000 annually found that the share of recipients working declined by 2 percentage points. This finding is consistent with previous research on lottery winnings and expanded child tax credit payments that similarly finds reductions in earnings or employment in response to cash transfers. A nationwide universal basic income would be prohibitively expensive and likely reduce work effort. Policies that phased out benefits as income rose would lower costs but impose implicit penalties on additional earnings, which research suggests would further reduce employment.
May 16, 2024
Critiquing Bastian (2022, 2023, 2024, and forthcoming): On Child Tax Credit Reform and the Sensitivity of Single Mothers to Work Incentives
In 2021, Congress passed and President Biden signed a major, but temporary, reform to the Child Tax Credit (CTC). Among other reforms to the credit, the American Rescue Plan Act (ARPA) made it available to non-workers on the same basis as workers. Attempts to make this reform permanent foundered, in part, due to opposition from policymakers who worried that the new credit would lead workers to withdraw from the labor force and otherwise discourage work. These concerns drew strength from a working paper by a team of economists at the University of Chicago, published that fall, that predicted that making the ARPA CTC permanent would lead nearly 1.5 million parents to leave employment, most of them lower-income single mothers.
March 28, 2024
An Early Look at the Child Tax Credit Changes in the Tax Relief for American Families and Workers Act of 2024
The Tax Relief for American Families and Workers Act of 2024 would expand the child tax credit by increasing the refundable credit, indexing the maximum benefit to inflation, raising the phase-in rate for families with multiple children, and allowing a one-year earnings lookback. These changes would increase benefits primarily for lower-earning families, especially those with multiple children or intermittent work. However, the policy would have mixed effects on incentives: The faster phase-in would strengthen incentives to enter work at low earnings levels but discourage some families from increasing their earnings or getting married. In addition, the lookback provision would generally weaken work participation incentives.
February 8, 2024
CTC Expansion Rooted in Desire to Roll Back Work-based Welfare
Modifications to the child tax credit (CTC) are included in H.R. 7024, the Tax Relief…
January 31, 2024
The Wyden-Smith Child Tax Credit and Work: Responding to Critics
The Wyden-Smith tax bill under consideration in the House has rekindled a debate about the…
January 30, 2024
How Sensitive Are Single Mothers’ Work Decisions to a Change in Incentives? Correcting Misperceptions of the Evidence
Estimates of how employment responds to changes in single mothers’ return to work are central to evaluating policies such as child tax credit expansions. A review of decades of research finds that commonly used labor supply elasticity estimates cluster around 0.75, with averages of roughly 0.8 across both literature reviews and original studies. These findings indicate that the assumption of a 0.75 elasticity in policy analyses is consistent with the broader empirical literature rather than an outlier estimate.
January 29, 2024
Per-Child Benefit in Wyden-Smith Child Tax Credit Bill Would Discourage Full-Time Work for Families with Multiple Children
The Wyden-Smith proposed tax legislation would make four changes to the Child Tax Credit (CTC). First, it…
January 29, 2024
Let’s Not Turn the Child Tax Credit Into Welfare
Proposed changes to the child tax credit (CTC) would expand benefits for low-income families, allow the credit to grow with inflation, and permit families with no current earnings to receive the credit based on prior-year income, weakening the annual work requirement. These changes would shift the CTC away from its role as work-linked tax relief toward being an unconditional cash benefit for families with children. Estimates suggest that eliminating the annual work requirement would reduce employment, raising broader questions about whether the CTC should function as primarily tax relief or a welfare program.
January 19, 2024
The Work Incentive and Employment Effects of Eliminating the Child Tax Credit’s Annual Income Requirement
Proposed 2024 child tax credit reforms would let families calculate eligibility using either current-year or prior-year income, significantly weakening the credit’s annual work requirement. The analysis estimates that this change would encourage some nonworking parents to enter employment while causing more consistently employed parents to stop working in some years. On net, the policy is projected to reduce employment by an average of 153,000 parents per year while also creating incentives for year-to-year fluctuations in work and hours.