The Initial Effects of the Expanded Child Tax Credit on Material Hardship

The transformation of the Child Tax Credit (CTC) into a more generous and inclusive monthly payment marks a historic, albeit temporary, shift in the American welfare state’s treatment of low-income families. To investigate the initial impact of the monthly CTC payments on material hardship among families with children, this study applies a series of difference-indifferences estimates using Census Household Pulse Survey microdata collected from mid-April through early August 2021. Our findings offer three primary conclusions regarding the initial effects of the first monthly CTC payment delivered mid-July 2021. First, the July 2021 CTC payment strongly reduced food insufficiency among low-income households with children; a $100 increase in CTC benefits (adjusted for household-size) is associated with a 7-percentage point, or roughly 25 percent, decline in food insufficiency among low-income families who report receipt of the CTC. Second, the effects of the first CTC payment on food insufficiency are concentrated among households with annual incomes of less than $35,000. Third, increasing the coverage rate of the CTC is critical for further reducing material hardship. Self-reported receipt suggests the lowest-income households were less likely than higher-income families to receive the first payment. As more children receive the benefit in future months, levels of material hardship may decline further. Even with imperfect coverage, however, our findings suggest that the first CTC payment was largely effective at reducing food insufficiency among low-income families with children.