The Differential Effects of Monthly & Lump-Sum Child Tax Credit Payments on Food & Housing Hardship
Note: As of May 2023, a version of our September 2022 working paper is now available as an academic article in the American Economic Association Papers and Proceedings, Volume 113. The findings remain the same.
The transformation of the Child Tax Credit into a more generous and inclusive monthly payment marked a historic, albeit temporary, shift in the American welfare state’s treatment of low-income families. Its hybrid structure—with six months of payments delivered July to December 2021 and a lump-sum payment worth the value of the remaining six months delivered at tax time in spring 2022— offered a natural experiment to investigate whether the effects of the expanded Child Tax Credit may vary by payment frequency and/or payment size.
This study investigates the effects of the monthly and the lump-sum expanded Child Tax Credit payments on food and housing hardship in the United States. It applies a series of difference-in-differences estimates to Census Household Pulse Survey microdata from April 2021 through May 2022. We find that the type of payment distribution matters: families were more likely to use the monthly benefits to purchase food, but the lump-sum benefits to catch up on rent payments. As a result, the monthly CTC payments reduced food insufficiency among families with children by at least 2.4 percentage points (20%), while the lump-sum payment reduced housing hardship, decreasing the likelihood that families with children were behind on housing payments by at least 1.2 percentage points (10%).
This study—both the version available in the American Economic Association Papers and Proceedings and in the working paper format—builds on our earlier assessment of the initial impacts of the monthly Child Tax Credit payments on material hardship among families with children using Census Household Pulse Survey microdata collected from mid-April through mid-August 2021 that found the first monthly Child Tax Credit payments strongly reduced food insufficiency among low-income households with children. This earlier study of just the first few payments, released September 2021, is also available as a National Bureau of Economic Research publication.
Suggested Citation:
Parolin, Zachary, Elizabeth Ananat, Sophie Collyer, Megan Curran, and Christopher Wimer. 2023. "The Effects of the Monthly and Lump-Sum Child Tax Credit Payments on Food and Housing Hardship." American Economic Association Papers and Proceedings, vol. 113: 406-12. doi: 10.1257/pandp.20231088