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Title: The Benefits and Costs of a U.S. Child Allowance
Citation Type: Working Paper
Publication Year: 2022
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Abstract: We conduct a benefit-cost analysis of a U.S. child allowance, based on a systematic literature review of the highest quality available causal evidence on the short-and long-term effects of cash and near-cash transfers. In contrast to the previous studies we synthesize, which tend to measure a subset of benefits and costs available in a particular dataset, we establish a comprehensive accounting of potential effects and secure estimates of each. We produce core estimates of the benefits and costs per child and per adult of increasing household income by $1,000 in one year; these can be applied to value any cash or near-cash program that increases household income. Using microsimulation, we then apply these estimates to determine net aggregate benefits of three child allowance policies, including the expanded Child Tax Credit as enacted for the year 2021 in the American Rescue Plan (ARP). Our estimates indicate that making that expansion permanent would cost $97 billion per year and generate social benefits with net present value of $982 billion per year. Sensitivity analyses indicate that our estimates are robust to alternative assumptions and that all three child allowance policies we evaluate produce very high net returns for the U.S. population.
Url: http://www.nber.org/papers/w29854
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Authors: Garfinkel, Irwin; Sariscsany, Laurel; Ananat, Elizabeth; Collyer, Sophie M.; Hartley, Robert Paul; Wang, Buyi; Wimer, Christopher
Series Title: NBER Working Paper Series
Publication Number: 29854
Institution: National Bureau of Economic Research
Pages: 1-54
Publisher Location: Cambridge
Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure, Poverty and Welfare, Work, Family, and Time
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