How Much Would Creating a Child Allowance Reduce Work Among Parents?
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.@swinshi notes that @JacobBastian25’s latest research underestimates the disemployment effects of an enhanced Child Tax Credit. Scott view of the disemployment effects support Bruce Myers and @kefincorinth CTC estimates @UChicago. @aei
In Bastrain’s reconciliation of his own results with those of the Bruce Myer’s Chicago team, Bastian misattributes something on the order of 200,000 of the one-million-parent difference in predicted disemployment to married parents rather than to low-income single mothers. Relative to the Chicago team, he underestimates the disemployment of low-income single mothers by a similar amount. The evidence remains consistent with the Chicago team’s claims: a permanent expansion of the CTC that resembles the temporary child allowance created in 2021 could reduce employment among single mothers by about one million, an effect that would go a long way toward reversing the employment gains among single mothers since the policy reforms of the mid-1990s.
Bottom line, “…The evidence remains consistent with the Chicago team’s claims: a permanent expansion of the CTC that resembles the temporary child allowance created in 2021 could reduce employment among single mothers by about one million, an effect that would go a long ways toward reversing the employment gains among single mothers since the policy reforms of the mid-1990s….”
Scott notes three core flaws
“..In his reconciliation of his own results with those of the Chicago team, Bastian misattributes something on the order of 200,000 of the one-million-parent difference in predicted disemployment to married parents rather than to low-income single mothers. Relative to the Chicago team, he underestimates the disemployment of low-income single mothers by a similar amount. This is one reason why Bastian’s results suggest that Corinth et al. have overestimated disemployment effects among upper-income parents..”
“…Bastian’s assumed size for the key parameter in the child allowance debates—the participation elasticity for low-income single mothers, which describes the sensitivity of their employment to changes in the return to work—is almost surely too low. The midpoint of the range of credible elasticities for this group is higher, not lower, than assumed by the Chicago team. Indeed, that midpoint is exactly the same if we only use the elasticities implied by Bastian’s own studies. That makes the Chicago team’s disemployment effects relatively conservative. Bastian’s arguments that recent studies find lower elasticities or that the elasticity for low-income single mothers has fallen substantially over time do not stand up against his own research and that of others….”
“…Of Bastian’s other attempts to invalidate the Chicago team’s results, one suffers from Bastian’s understatement of the disemployment effect on low-income single mothers, one constitutes an illogical exercise in applying averages to subgroups to show results that seem implausible, and one is a markedly imprecise back-of-the-envelope exercise that can easily be modified to reinforce the Chicago team’s results….”
Scott Winship, “How Much Would Creating a Child Allowance Reduce Work Among Parents?,” American Enterprise Institute, December 9, 2022, https://www.aei.org/research-products/working-paper/how-much-would-creating-a-child-allowance-reduce-work-among-parents/
