Welfare reforms in recent decades have shifted the way the U.S. delivers assistance to low-income families away from direct cash assistance to an increasing reliance on refundable tax credits that are contingent on working. Many studies have shown that the Earned Income Tax Credit (EITC) improves economic wellbeing and maternal labor supply, yet to date, no study has examined how refundable tax credits affect children’s childcare arrangements. This study uses the Survey of Income and Program Participation, using a parameterized difference-in-differences approach whereby we capture several federal and state policy changes to the EITC and the Child Tax Credit over time to examine how refundable tax credits affect a number of child care outcomes (use, hours, multiple care arrangements, type of care, and cost). By understanding how refundable tax credits affect child care arrangements, we can better understand the implications of current policy, and potential policy expansions, for children.
Presented in Session 153. Poverty and Social Policy