The Costs and Benefits of a Allowance I. Introduction II. Child Allowances and Tax Credits: Brief International and Historical Context III. Expected Costs and Benefits and Empirical Methodology

III.A. Expected Costs and Benefits

Table 1 Conceptual table of benefits (+) and costs (-) of a child allowance

Table 1 Conceptual table of benefits (+) and costs (-) of a child allowance (continued)

3 III.B. Empirical Methodology III.B.1. Similarity of impacts of all cash and near cash benefits 4

IV. Measuring Impacts: Study Summaries, Findings, Data, Methods, and Standardization Table 2: Estimated Impacts of a $1,000 Increase in Household Income as a Result of a Cash or Near-cash Transfer IV.A. Children’s Future Earnings

IV.A.1. Aizer et al. (2016) Summary

Calculations 퐵 0 0 127 127 푃퐷푉 = ∑푛 푡 = + + ⋯ + + ⋯ + (1) 푡=0 (1+푖)푡 (1+0.03)1 (1+0.03)2 (1+0.03)11 (1+0.03)53

IV.A.2. Hoynes et al. (2016) Summary

Calculations IV.A.3. Bastian & Michelmore (2018) Summary

Calculations

IV.A.4. Bailey et al. (2020) Summary Calculations

IV.A.5. Price & Song (2018) Summary

Calculations

IV.B. Children’s Taxes

IV.C. Children’s Health

IV.C.1. Monetizing the value of life and health IV.C.2. Neonatal Mortality IV.C.2.a. Almond et al. (2011) Summary

Calculations IV.C.3. Children’s health age 1 to death

IV.C.3.a. Averett & Wang (2018) Summary

6

Calculations

6 IV.C.3.b. Hoynes et al. (2016) Summary

Calculations We use Hoynes et al. (2016)’s

IV.C.3.c. Bailey et al. (2020) Summary

Calculations

IV.C.4. Child longevity IV.C.4.a. Aizer et al. (2016) Summary

Calculations

IV.C.4.b. Bailey et al (2020) Summary

Calculations

IV.D. Reduced Health Expenditures for Children

IV.D.1. Healthcare expenditures in first 6 months of life and low birthweight

IV.D.1.a. Beam et al. (2020) IV.D.2. Healthcare expenditure “elasticity”7

7 IV.D.3. Healthcare expenditures age 6 months till death

8

IV.E. Increases in Health IV.E.1. Self-rated Overall Health and Physical Health IV.E.1.a. Larrimore (2008) Summary

Calculations

58 58 58 (19∗58+1∗(58+ 1+ 2+⋯+ 33)) (1+0.03) (1+0.03) (1+0.03) (2) 20 IV.E.1.b. Evans & Garthwaite (2014) Summary

Calculations

IV.E.1.c. Morgan et al. (2020) Summary

IV.E.2. Longevity or Mortality

IV.E.2.a. Price & Song (2018) Summary

Calculations Calculations

IV.E.2.b. Chetty et al. (2016) Summary Calculations

IV.F. Reduced Health Expenditures for

5.78 5.78 5.78 10.94 10.94 (19∗3.05+1∗(5.78+ 1+ 2+⋯+ 19+ 20+⋯+ 33)) (1+0.03) (1+0.03) (1+0.03) (1+0.03) (1+0.03) × 0.9 (3) 20 IV.G. Child Welfare IV.G.1. Berger et al. (2017) Summary

Calculations

IV.H. Other Transfers Calculations

IV.I. Decreases in Crime IV.I.1. Heckman et al. (2010) and the Value of Crime Reduction IV.I. 3. Bailey et al. (2019) Summary

Calculations

IV.J. Decreased Parent Taxes

V. Converting Impacts Estimates to Aggregate Estimates of Present Discounted Values of Costs and Benefits V.A. Benefits and Costs of a Child Tax Credit Per $1,000 Increase in Household Income

Table 3: Present Discounted Value of Monetary Benefits and Costs of a Child Tax Credit per $1,000 Increase in Household Income: Using Mean Impact Estimates IV.B. How Much Benefits Decline as Income Increases Calculations

12 V.C. Micro-Simulation Estimates V.C.1.Costs and Distribution of Gross and Net Benefits

13

14

15

16

Table 5: Cost of a fully-refundable federal Child Tax Credit of $2,000 without an earnings requirement ($billions, annual)

13

14 15

16 17 18

19

Table 6: Net increase in credit/allowance amount from a fully-refundable federal Child Tax Credit of $2,000 per and per child (annual)

Table 7: Cost of the American Family Act ($billions, annual)

17 18 19 Table 8: Net increase in credit/allowance amount from the American Family (annual)

V.C.2. Reductions in Work and Earnings

20

Table 9: Income Elasticity of Employment and Hours

20 Table 10: Income Elasticity of Employment and Hours

V.C.3.Reductions in Child Poverty

V.D. Aggregate Costs and Benefits of Making the Tax Credit Fully Refundable and the American Family Act

21 Table 11: Present Discounted Value of Aggregate Monetary Benefits and Costs of a Fully- Refundable Federal Child Tax Credit (in $Billions) 22

Table 12: Present Discounted Value of Aggregate Monetary Benefits and Costs of the American Family Act: Using Mean Impact Estimates (in $Billions)

VI. Sensitivity Analyses Table 13: Sensitivity Analysis Results VII. Summary and Conclusion References

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Appendix 1: Literature Search Methodology

1B. Search Terms used: Children’s earnings

Children’s health/longevity

Parent health/longevity

Crime

Parent mental health

Children’s educational attainment

1C. Explanation of why papers were cut in Stage 3

Appendix 2: Impact Literature

A2.a. Birthweight A2.a.1. Kehrer & Wolin (1979) Summary

Calculations

A2.a.2. Almond et al. (2011) Summary

Calculations

A2.a.3. Hoynes et al. (2015) Summary

Calculations

A2.a.4. Markowitz et al. (2017) Summary Calculations

A2.b. Parent Mental Health Literature A2.b.1. Boyd-Swan et al. (2016) Summary

Calculations.

A2.b.2. Gangopadhyaya et al. (2020) Summary

Calculations

A2.c. Childhood Education Attainment Literature A2.c.1. Akee et al. (2010) Summary. Calculations

A2.c.2. Maxfield (2013) Summary

Calculations A2.c.3. Michelmore (2014) Summary

Calculations

A2.c.4. Hoynes et al. (2016) Summary

A2.c.5. Aizer et al. (2016) Summary

Calculations

A2.c.6. Bastian & Michelmore (2018) Summary

Calculations

A2.c.7. Thompson (2019) Summary

Calculations

Appendix 3: Impact of earnings on other transfers received

The Costs and Benefits of a Child Allowance

Suggested Citation Garfinkel, Irwin, Laurel Sariscsany, Elizabeth Ananat, Sophie Collyer, and Christopher Wimer. 2021. "The Costs and Benefits of a Child Allowance." Poverty and Social Policy Discussion Paper. Center on Poverty and Social Policy, Columbia University. www.povertycenter.columbia.edu/news- internal/2021/child-allowance/cost-benefit-analysis

Acknowledgments The work of the Center on Poverty and Social Policy is supported by Robin Hood. We also thank Jason Cone and Loris Toribio for initiating the study, Derek Kaufman for providing helpful comments, Stacie Tao for research assistance and Sonia Huq for help preparing this brief.

The Center on Poverty and Social Policy at the Columbia School of Social Work produces cutting-edge research to advance our understanding of poverty and the role of social policy in reducing poverty and promoting opportunity, economic security, and individual and family-wellbeing. The center’s work focuses on poverty and social policy issues in New York City and the United States. For the latest policy briefs, go to povertycenter.columbia.edu. Follow us @cpsppoverty.

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