Interesting article. I think that it is clear that the Child Tax credit has significantly more positive effects than most other social policies for the poor. Thanks for presenting the evidence.
Having said that I think that eligibility requirements should be significantly reformed and the amount should be increased so that it would have a more positive effect on married working families and their children. I believe this can also help to promote Upward Mobility for youths born into below-average income families:
It’s important not to let the CTC become just another welfare program for dysfunctional single mothers. That’s what we are seeing a lot of in leftist states. Tim waltz passed a CTC that starts phasing out at $35,000 income and has not work requirement.
Im not sure whether the data suggests that. Moreover, it is unclear why financial support would not have the same benefits if not greater to single parent households. Something that can be looked into.
It is worth noting that the CTC benefit is quite small relative to income. Thus, as significant research has shown - work requirements do not actually impact the labor decision but rather end up punishing the most vulnerable, as in the case of SNAP https://www.nominalnews.com/p/work-requirements-snap
If it increases the fertility of the underclass, it's dysgenic and counter productive. The underclass already receive massive government assistance and have higher fertility rates than the middle and upper middle classes.
A properly designed CTC would *increase* with income, normalizing the disposable income of child bearing and childless households at each income threshold (to do so we would need a greatly expanded CTC, but not impossible).
At a minimum you don't want to say "successful peoples children are worthless and you get nothing." That's what income phase outs say.
If your conception of the CTC is as welfare vote bank program for electoral purposes, then you can get away with a cheaper version that just targets that. This seems to be the difference between the leftist (targets single moms of the underclass) and rightist (targets middle and upper middle class married people) vision of the CTC.
I'd have to do a deeper dive, but from the global research I have seen cash transfers have very little impact on the decision to have children. Countries that have tried it such as Poland and Hungary saw no long run impact. One example of a paper for the US is here - https://link.springer.com/article/10.1007/s00148-007-0177-0
Thus I would not expect these policies to change the decision of having children.
The main measured benefit of cash transfers such as the CTC are the investment in child human capital that occurs. This has significant payoffs to society in both generated long run value and saved long run costs.
Yes, because there is no society in the world that comes close to providing support even remotely close to the cost of raising a child, none have been effective. The problem is one of both scale and efficiency (when they do provide assistance, it is often in-kind subsidies that the recipient may value below cost rather then cash). This is to be expected.
Only at the lowest levels of income is the support so high that the marginal cost of another child is basically zero. And lo and behold we find that this group is the only* group with replacement level fertility! It's almost like the marginal cost of the child for an individual household, not what you can "afford", is what determines fertility decisions.
I expect most of your positive effects to fade with time and pale in comparison to the negative effect of dysgenics.
*The absurdly rich, for whom the cost of a marginal child is meaningless as a % of income, also have replacement fertility. So we know money works, but they are a very small segment of the population. The UMC have the lowest fertility.
Interesting article. I think that it is clear that the Child Tax credit has significantly more positive effects than most other social policies for the poor. Thanks for presenting the evidence.
Having said that I think that eligibility requirements should be significantly reformed and the amount should be increased so that it would have a more positive effect on married working families and their children. I believe this can also help to promote Upward Mobility for youths born into below-average income families:
For those who are interested in more details:
https://frompovertytoprogress.substack.com/p/the-case-for-a-working-family-tax
+1
It’s important not to let the CTC become just another welfare program for dysfunctional single mothers. That’s what we are seeing a lot of in leftist states. Tim waltz passed a CTC that starts phasing out at $35,000 income and has not work requirement.
Im not sure whether the data suggests that. Moreover, it is unclear why financial support would not have the same benefits if not greater to single parent households. Something that can be looked into.
It is worth noting that the CTC benefit is quite small relative to income. Thus, as significant research has shown - work requirements do not actually impact the labor decision but rather end up punishing the most vulnerable, as in the case of SNAP https://www.nominalnews.com/p/work-requirements-snap
The benefit of the CTC is increased fertility.
If it increases the fertility of the underclass, it's dysgenic and counter productive. The underclass already receive massive government assistance and have higher fertility rates than the middle and upper middle classes.
https://www.aei.org/pethokoukis/julias-mother-why-a-single-mom-is-better-off-with-a-29000-job-and-welfare-than-taking-a-69000-job/
https://miro.medium.com/v2/resize:fit:625/1*2oBiD8sb2P1Ra3i3vjcBug.png
A properly designed CTC would *increase* with income, normalizing the disposable income of child bearing and childless households at each income threshold (to do so we would need a greatly expanded CTC, but not impossible).
At a minimum you don't want to say "successful peoples children are worthless and you get nothing." That's what income phase outs say.
If your conception of the CTC is as welfare vote bank program for electoral purposes, then you can get away with a cheaper version that just targets that. This seems to be the difference between the leftist (targets single moms of the underclass) and rightist (targets middle and upper middle class married people) vision of the CTC.
I'd have to do a deeper dive, but from the global research I have seen cash transfers have very little impact on the decision to have children. Countries that have tried it such as Poland and Hungary saw no long run impact. One example of a paper for the US is here - https://link.springer.com/article/10.1007/s00148-007-0177-0
Thus I would not expect these policies to change the decision of having children.
The main measured benefit of cash transfers such as the CTC are the investment in child human capital that occurs. This has significant payoffs to society in both generated long run value and saved long run costs.
Yes, because there is no society in the world that comes close to providing support even remotely close to the cost of raising a child, none have been effective. The problem is one of both scale and efficiency (when they do provide assistance, it is often in-kind subsidies that the recipient may value below cost rather then cash). This is to be expected.
Only at the lowest levels of income is the support so high that the marginal cost of another child is basically zero. And lo and behold we find that this group is the only* group with replacement level fertility! It's almost like the marginal cost of the child for an individual household, not what you can "afford", is what determines fertility decisions.
I expect most of your positive effects to fade with time and pale in comparison to the negative effect of dysgenics.
*The absurdly rich, for whom the cost of a marginal child is meaningless as a % of income, also have replacement fertility. So we know money works, but they are a very small segment of the population. The UMC have the lowest fertility.