Effects of the expanded Child Tax Credit on employment outcomes

Abstract

The temporary 2021 expansion of the Child Tax Credit (CTC) was intended to reduce child poverty during the COVID-19 pandemic. The expansion’s elimination of an existing phase-in with earnings, however, potentially disincentivized labor supply, raising concerns that it would reduce parent employment. We empirically test for employment effects using difference-in-differences analyses with Current Population Survey data. Across many specifications and multiple sub-groups, we find very small, inconsistently signed, statistically insignificant impacts of the 2021 CTC on parental labor force participation and employment.