Tax Credits and Child Outcomes: Lessons from the U.S., U.K., and Canada

Katherine Michelmore

No 33822, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Over the last several decades, there have been historic shifts in the structure of cash transfer programs in Western, developed countries, including the U.S., Canada, and U.K. For all three of these countries, the turn of the 21st century marked a shift away from unconditional cash transfer programs like traditional cash welfare, towards an emphasis on benefits that encourage or require work. In this paper, I review the evidence on the impact of tax credits on child outcomes, focusing on what is known about child-oriented tax credits in the U.S. (EITC, CTC), the U.K. (WFTC, CTC, WTC), and Canada (Canada Child Tax Benefit (CCTB), National Child Benefit (NCB), and the Canada Child Benefit (CCB). Overwhelmingly, the evidence from these three countries suggests that tax credits have positive impacts on children on a host of different outcomes, including infant birthweight, childhood health and achievement, educational attainment, wages, and poverty in adulthood. While there is a large, growing body of evidence on the impact of these tax credits on children, future work should further investigate the precise mechanisms through which tax credits impact child outcomes, the characteristics of children most impacted by these credits, and the importance the frequency of credits distribution.

JEL-codes: H5 I38 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-dem, nep-hea and nep-pbe
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