This article conducts a benefit-cost analysis of a child allowance. Through a systematic literature review of the highest quality evidence on the causal effects of cash and near-cash transfers, this article produces core estimates on the benefits and costs per child and per adult of increasing household income by $1000, which can be used for any cash or near-cash program that increases household income. We then apply these estimates to three child allowance proposals, with the main proposal converting the $2000 Child Tax Credit in the federal income tax code into a fully refundable and more generous child allowance of $3600 per child ages 0–5 and $3000 per child ages 6–17, as enacted for 1 year in the American Rescue Plan. Aggregate costs and benefits are estimated via micro-simulation. Our estimates indicate that making the $2000 Child Tax Credit fully refundable and increasing benefits to $3000/$3600 would cost $97 billion per year and generate social benefits of $929 billion per year. Sensitivity analyses indicate that the results are robust to alternative assumptions and that each of the three child allowance proposals produces a very strong to an extraordinarily strong return for the U.S. population.
While research highlights that, on average, women's income and labor force participation fall around the time of a birth, little is known about how women's experiences of poverty around childbirth vary by birth parity or race and ethnicity. Using data from the Survey of Income and Program Participation and the Supplemental Poverty Measure (a comprehensive measure of poverty), this research note examines the poverty rate of mothers overall and by birth parity and racial and ethnic group in the six months before and after childbirth. We also assess the role of current government support programs in moderating financial losses during the time around a birth. We find that poverty rates among mothers increase after childbirth, with the magnitude varying by birth parity and racial and ethnic group. While current government programs help reduce poverty among mothers around childbirth, these programs do not protect mothers from falling into poverty after childbirth nor do they reduce the inequities in poverty by race or ethnicity. Our results highlight the need for greater public assistance for mothers with recent births to ensure improved child and family well-being and also call attention to the need for policies to address long-standing racial and ethnic inequities in child and family well-being.
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