Pandemic-era expansions to the Child Tax Credit (CTC)—one of the largest income transfer programs in the U.S.—was associated with improved child behavioral health, according to a new study led by researchers at Harvard T.H. Chan School of Public Health.
The study was published Dec. 10 in Milbank Quarterly. Guangyi Wang, research associate in the Department of Social and Behavioral Sciences, was the corresponding author. Other authors included Daniel Collin, senior statistical analyst, and Rita Hamad, professor of social epidemiology and public policy.
In July 2021, amid the COVID-19 pandemic, Congress temporarily expanded the CTC to alleviate material hardship. More American families were eligible to receive extra income from the CTC, and payments increased and were distributed as monthly allotments, rather than as an annual tax refund.
Previous research has linked this expansion to reduced food insecurity and improved parental mental health. But few studies have examined the impacts specifically on children. To fill in this gap, the researchers analyzed data on caregiver/self-rated child health and behavioral problems collected between 2020 and 2021 by the Child Development Supplement of the Panel Study of Income Dynamics. More than 1,000 children were included in the study, whose families received varying levels of financial support from the CTC.
The study found that the income boost from the CTC improved child behavioral health. A $1,000 increase in payments, distributed through monthly allotments, was associated with a 10% reduction in child behavioral problems compared to baseline. When the CTC expansion expired, and these payments ended, child wellbeing took a nosedive. Behavioral problems increased, particularly among Black and lower-income children, whose families had received the greatest CTC increases.
“Although the advanced payments may have temporarily alleviated financial stress and supported improved parenting practices, the temporary nature of the expansion likely heightened psychological distress for parents after payments ended,” the researchers noted as a possible explanation for the decline in child behavioral health.
They also noted that the study can inform the many states considering their own CTCs. The findings suggest that to support child wellbeing, states should consider monthly credits rather than a once-a-year tax refund, which is the standard.
