Date of Award

5-11-2025

Date Published

June 2025

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Public Administration

Advisor(s)

Emily Wiemers

Keywords

caregiving;consumption;CTC;EITC;labor supply;time use

Subject Categories

Public Affairs, Public Policy and Public Administration | Public Policy | Social and Behavioral Sciences

Abstract

In the United States, tax credits are one of the primary ways the federal government supports families with children. This dissertation focuses on the effect of tax credits on the way recipients spend their time and money. I use time use data to examine how tax credits change recipients’ time allocated to both labor supply and caregiving. I use consumption data to examine changes in spending and savings behavior induced by tax credits. Combined, these elucidate the mechanisms through which these policies affect the well-being of recipients and their family members. My first chapter is the first study to examine the effect of the Earned Income Tax Credit (EITC) on unpaid caregiving for adults, which could operate through the credit’s effects on labor supply and household income. Using a sample of unmarried mothers and data from the American Time Use Survey (ATUS), I employ a simulated benefit approach to generate causal estimates of the effect of EITC generosity on time use. I find that increases in average EITC benefits have differential effects on assisting adults by both the age of the EITC recipient and the relationship between the EITC recipient and the care recipient. Results for other types of time use (paid work, home production, leisure, childcare, education, sleep), as well as probability of multigenerational co-residence, help explain these shifts. There has been relatively little causal examination of the Child Tax Credit (CTC)’s effect on parental labor supply, especially compared to the extensive empirical literature on the EITC. In my second chapter, I thus leverage a major federal expansion of the CTC that took place in 2018 as a part of the Tax Cuts and Jobs Act (TCJA) to estimate the marginal effect of a CTC dollar on parental labor supply for three groups of parents: unmarried mothers, married fathers, and married mothers. I use data from the Current Population Survey’s Annual Social and Economic Supplement (CPS ASEC) to do so. I also examine treatment effect heterogeneity across parts of the CTC benefit schedule where theoretical predictions of the effects of increased generosity diverge (phase-in versus plateau ranges) and calculate labor supply elasticities. I find that in response to increased average CTC benefits, unmarried mothers and married parents in the phase-in range of the CTC benefit schedule are more likely to be employed or increase their hours worked. However, those beyond the phase-in range of the CTC benefit schedule are estimated to maintain or reduce their labor supply. In the third chapter, I return to the EITC and examine how policy generosity affects consumption and savings behavior. I use 1999-2019 data from the Panel Study of Income Dynamics (PSID) that includes annual spending data on a variety of disaggregated consumption categories, as well as annual measures of assets and debt. This expands the current literature, in which we know more about how EITC eligibility is associated with the timing of consumption, rather than the causal relationship between benefit generosity and annual consumption. These annual measures also speak more directly to the mechanisms through which the EITC may improve well-being. I find that policy-induced increases in EITC benefits increase spending on work-related costs like childcare and transportation; big-ticket purchases like owning a vehicle; goods and services with positive income elasticities like eating out, private health insurance, education, and recreation and entertainment; and wealth through decreased student debt and increased savings.

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