The Benefits and Costs of a U.S. Child Allowance / Irwin Garfinkel, Laurel Sariscsany, Elizabeth Ananat, Sophie M. Collyer, Robert Paul Hartley, Buyi Wang, Christopher Wimer.

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Garfinkel, Irwin

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w29854.Publication details: Cambridge, Mass. National Bureau of Economic Research 2022.Description: 1 online resource: illustrations (black and white)Subject(s):

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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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w29854 (Browse shelf(Opens below))	Not For Loan

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March 2022.

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.