Child Tax Credit could spur some parents to stop working: Study

Key Facts

Because the earlier version of the CTC required families to have a tax liability — in other words, to earn money and owe taxes on it — to receive the full credit, that provided a form of work incentive, University of Chicago's Meyer said.
But a new study from researchers at Columbia University's Center on Poverty and Social Policy looked at the impact of the CTC payments that started in July — and found that the checks have "had no significant effect on employment and labor force participation for any income group."
"Do we really believe that millions of parents will quit their jobs to live on an extra $2,000 to $3,000 in child tax credit payments?' Goldin is estimating the difference between the prior CTC, at $2,000 per child, versus its expanded version of up to $3,600 — which means that on a per child basis, parents at most would receive an extra $1,600 per child from the expanded CTC compared with the prior version.
By Meyer's estimate, child poverty would fall by 22% even if 1.5 million parents stopped working as a result of the payments — not bad, he said, but far from the 34% reduction in child poverty if the payments don't have an impact on workforce participation.