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Study: Monthly Child Tax Credit Spurred Entrepreneurial Boom

A recent Social Policy Institute analysis of Census Pulse Survey data released today reaffirmed similar previous studies showing that the Child Tax Credit (CTC) removed barriers to work and encouraged families to start new businesses.

HF Press Statement

WASHINGTON, D.C. — A recent analysis of Census Pulse Survey data released today by the Social Policy Institute at Washington University in St.Louis (SPI) reaffirmed similar previous studies showing that the Child Tax Credit (CTC) removed barriers to work and encouraged families to start new businesses.

By observing employment rates among CTC recipients and non-recipients, as well as parents and non-parents, the analysis revealed that CTC recipients “tended to be employed at higher rates than non-recipients, and that employment was stable for both groups.”

The analysis comes at a pivotal moment for the Child Tax Credit, which expired in December 2021. Some opponents of the policy cited disincentivizing labor as a negative effect of the small, regular monthly payments.

“Thus far, there is no evidence within the Census Household Pulse data—a large, high-quality, nationally-representative data source—that CTC payments are leading people to leave the workforce,” write the study’s authors, Dr. Stephen Roll, Dr. Leah Hamilton, and Dr. Yung Chun.

“Our results appear consistent with the bulk of the evidence concerning the CTC and employment, including a recent study from the Center on Poverty and Social Policy that used both Current Population Survey and Census Household Pulse data to demonstrate that CTC payments have not led to employment declines.”

In response to the new Social Policy Institute analysis, Humanity Forward Spokesperson Greg Nasif issued this statement:

“This study reaffirms what we already know – the monthly Child Tax Credit is actively unleashing the economic might of American parents. Thanks to these modest monthly payments, parents are going back to work, starting new businesses, feeding their children better, and contributing to our economy. Real world data shows what direct support does for families – now it’s time for Congress to act, to invest in our future, and renew the monthly Child Tax Credit.”

In the six months of monthly payments, the Child Tax Credit has proven itself to be an efficient tool for poverty reduction without having adverse affects on the workforce. The policy reduced food insecurity by 26% among recipient households, and a study from Columbia University found that the CTC kept 3.7 million children above the poverty line. Analysis of the policy’s expense also found that the CTC provides $8 in social and economic benefits for every $1 spent.