Quick pause in the jobs day discourse! Yesterday, a paper from the Becker Friedman Institute came out, with new estimated effects of the CTC on employment (πΌ) and poverty (π½). I've got a response at @niskanencenter here: niskanencenter.org/reevaluating-tβ¦
First - this isn't a methodological critique. See
But how should we interpret the findings as given?
https://twitter.com/HilaryHoynes/status/1446164066511167512for that, and I'm sure other folks are looking at the paper now.
But how should we interpret the findings as given?
1.) The paper reinforces one important claim we've made before - that very few people will stop working because of the money they get from the CTC (what economists' call the "income effect".)
If you, like @Sen_JoeManchin, are concerned that the CTC expansion will create an βentitlement society,β this paper should alleviate those concerns.
2.) The paper instead suggests that we might see fewer jobs because of the "substitution effect" of getting rid of the previous CTC phase-in.
That is, the CTC was previously a job subsidy, and now it isn't.
That is, the CTC was previously a job subsidy, and now it isn't.
They argue that this is equivalent to getting rid of the EITC, which also subsidizes work.
(Folks might recall that the EITCs effect was hotly debated two years ago - here's a thread:
https://twitter.com/arindube/status/1123701131291578369)
If this is true, one question that's worth asking is whether this is a specific policy margin we think government should be pushing on.
How much do we value *parents* being in the workforce instead of at home?
How much do we value *parents* being in the workforce instead of at home?
Some folks think that we should generally push this in the opposite direction, encouraging parents to leave the workforce to focus on childcare: slate.com/news-and-politβ¦
https://twitter.com/lymanstoneky/status/1446140242289958914
This was even a major argument in @bgmasters's Senate race announcement
https://mobile.twitter.com/bgmasters/status/1414735254036783104
@hamandcheese has argued that this is something the government should be neutral on - neither pushing nor pulling.
The fully refundable CTC does just that. niskanencenter.org/bad-arguments-β¦
The fully refundable CTC does just that. niskanencenter.org/bad-arguments-β¦
3.) Finally, it's worth noting that while the paper is modeling the decisions made by parents, another important player can make decisions here: employers.
If parents really are leaving the labor market in droves, I'd expect firms to come up with ways to stop that from happening!
Most obviously this could be through raising wages, but there's a lot of other options that are available - like making working hours more flexible, or letting people have more notification when they change.
/endthread (I need to go pick up my daughter at daycare)
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