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Real-Time Poverty, Material Well-Being, and the Child Tax Credit
Jeehoon Han, Bruce Meyer, James X. Sullivan ·
Summary
Written by AI, not yet AICS's view · claude-sonnet-5-5The paper compares two monthly measures of poverty in the United States that were developed during the COVID-19 pandemic. It uses them to look at child poverty around the temporary 2021 expansion of the Child Tax Credit (CTC). The authors prefer the measure based on survey responses over the one based on imputation, but say both have important drawbacks. They conclude that widely publicised claims about large falls and rises in child poverty are based on weak evidence. In their view, the best available evidence points to fairly stable poverty from 2021 to the first half of 2022.
Key points
- Two timely poverty measures are evaluated: the Han et al. near real-time measure, which uses responses to an income question on the Monthly CPS, and the CPSP measure, which imputes poverty from demographic and employment variables.
- The authors consider the response-based measure conceptually preferable to the imputation-based one, though both have important drawbacks.
- Claims that child poverty fell by 25 percent when the Advance CTC payments started and rose by 41 percent when they ended are described as based on weak evidence and overstated.
- The best, though still imperfect, evidence suggests poverty was relatively stable in 2021 and the first half of 2022.
- Part of the explanation appears to be a compensating decline in employment among low-skilled workers with children.
Limitations
Only the abstract is available, so the data, methods and size of the estimates cannot be checked. The authors say the evidence is imperfect and that other evidence linking well-being to the tax credit is confounded by other policy changes.
Abstract
In response to the COVID-19 pandemic two new timely poverty measures have been developed to monitor fast-changing economic conditions for the most deprived. The Han et al. near real-time poverty measure uses responses to a global income question on the Monthly Current Population Survey (CPS) that is available for a subsample of those surveyed. The CPSP monthly poverty measure, widely cited in the media, uses data from the Annual Social and Economic Supplement to the CPS and other sources to impute poverty in the Monthly CPS sample based on demographic and employment variables. This paper evaluates the two measures and their estimates of child poverty around the 2021 temporary changes to the Child Tax Credit (CTC). We argue that conceptually the measure based on responses rather than the one based on imputations is preferable, though both measures suffer from important drawbacks. We also conclude that widely publicized claims that child poverty fell by 25 percent when the Advance CTC payments started and subsequently rose by 41 percent when they ended are based on weak evidence and are overstated. The best evidence, though still imperfect, suggests poverty was relatively stable in 2021 and the first half of 2022. Part of the explanation for the lack of change appears to be a compensating decline in employment among low-skilled workers with children. Other evidence tying changes in well-being to the tax credit is confounded by other policy changes.
Findings the Hub has extracted
Each claim below is labelled by its type of design and links back to this report.
- Intervention
- The 2021 temporary expansion of the Child Tax Credit, including the Advance CTC payments
- Population
- Children and families in the United States, as covered by the Monthly Current Population Survey
Key finding
Claims of a 25 percent fall in child poverty when the Advance CTC payments started and a 41 percent rise when they ended are called weak and overstated.
Han et al. · Crossref · 1 Jan 2022