The Effects of the Child Tax Credit on Labor Supply

67 Pages Posted: 19 Mar 2020

See all articles by Kye Lippold

Kye Lippold

Office of Tax Analysis, US Treasury

Date Written: November 11, 2019


The Child Tax Credit (CTC) is a major earnings subsidy in the US tax and transfer system, but its effects have received little research attention compared to the Earned Income Tax Credit. I identify the effects of the CTC on extensive margin labor supply using a difference-in discontinuities design, exploiting the fact that parents lose eligibility for the credit when a child turns 17. Focusing on the credit’s effects among lower-income households in the Survey of Income and Program Participation, I find that loss of the credit leads to an 8.4 percentage point reduction in the probability a child’s parents are employed. The implied elasticity is at the upper bound of previous studies, consistent with an intertemporal substitution response.

Keywords: Child Tax Credit

JEL Classification: H24, J18, J22

Suggested Citation

Lippold, Kye, The Effects of the Child Tax Credit on Labor Supply (November 11, 2019). Available at SSRN: or

Kye Lippold (Contact Author)

Office of Tax Analysis, US Treasury ( email )

1500 Pennsylvania Ave. NW
Washington, DC 20220
United States


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