Tax credits and child outcomes: lessons from the United States, the United Kingdom and Canada

Katherine Michelmore

Fiscal Studies, 2025, vol. 46, issue 1, 65-90

Abstract: Over the last several decades, there have been historic shifts in the structure of cash transfer programmes in Western, developed countries, including the United States, the United Kingdom and Canada. For all three of these countries, the turn of the 21st century marked a shift away from unconditional cash transfer programmes, such as 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 US (i.e. earned income tax credit and child tax credit), the UK (i.e. working families’ tax credit, child tax credit and working tax credit) and Canada (i.e. Canada child tax benefit, national child benefit and Canada child benefit). Overwhelmingly, the evidence from these three countries suggests that tax credits have positive impacts on children for 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 affect child outcomes, the characteristics of children most affected by these credits, and the importance of how frequently the credits are distributed.

Date: 2025
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https://doi.org/10.1111/1475-5890.12396

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Persistent link: https://EconPapers.repec.org/RePEc:wly:fistud:v:46:y:2025:i:1:p:65-90

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