We find that the temporary, COVID-era expansion of the Child Tax Credit significantly reduced child poverty, although this reduction is probably overstated in some research because the earlier results were based on the expansion of eligibility, not on the actual receipt of the credit. Meanwhile, researchers generally find no evidence that the temporary expansion reduced the work incentive. However, policymakers should exercise caution before deciding to reinstate or make permanent the expansion, as a permanent enactment of such a policy might disincentivize work.
This article appeared in the Fourth Quarter 2024 issue of Economic Insights. Download and read the full issue.
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