Jonathan Choi (USC, moving to Washington University; Google Scholar), Do Work Requirements Matter? New Evidence (JOTWELL) (reviewing Jacob Goldin (Chicago; Google Scholar), Tatiana Homonoff (NYU; Google Scholar), Neel Lal (Chicago), Ithai Lurie (Treasury Department; Google Scholar), Katherine Michelmore (Michigan; Google Scholar) & Matthew Unrath (USC; Google Scholar), Work Requirements and Child Tax Benefits (NBER Working Paper No. 32343 Dec. 2024):
Work requirements are pervasive in American social safety nets: for example, the federal Earned Income Tax Credit and Child Tax Credit both only kick in after a taxpayer makes a certain level of income. Work requirements are controversial because they exclude the worst-off (including those who are unable to work) from receiving government benefits. One important reason that they remain is that conditioning benefits on employment is thought to encourage labor force participation. But is this really true? A remarkable new paper by Jacob Goldin, Tatiana Homonoff, Neel Lal, Ithai Lurie, Katherine Michelmore, and Matthew Unrath provides compelling evidence that, at least in the context of state child tax credits, the answer is no.
In Work Requirements and Child Tax Benefits, the authors rigorously study the effects of conditioning child tax benefits on work. Their primary focus is a 2022 reform in California that eliminated the work requirement for the state’s Young Child Tax Credit (YCTC). Before this change, families needed at least $1 of earned income to receive the full $1000 credit; afterward, even non-working families qualified. The authors complement this analysis with evidence from five other states with varying child tax credit designs. …
Overall, the authors have produced a careful, methodologically innovative paper with important policy implications. Their findings suggest that we may be able to expand child tax benefits to non-working families—reaching those who may need assistance most—without meaningfully reducing labor force participation. This is an important result and definitely worth a read for anyone interested in tax or poverty law.
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