IRP Book Talk: Jane Waldfogel on Child Benefits: A Smart Investment for America’s Future

Siers-Poisson [00:00:06] Hello, and thanks for joining us for the Poverty Research and Policy podcast from the Institute for Research on Poverty at the University of Wisconsin-Madison. I’m Judith Sears-Poisson. For this episode, Dr. Jane Waldfogel joins us to discuss her recently published book, titled, “Child Benefits: A Smart Investment for America’s Future,” that was published by the Russell Sage Foundation, and you can find a link to the book in the program note for this episode. Jane Waldfogel is a professor of social work and public affairs at the Columbia University School of Social Work and a visiting professor at the Center for Analysis of Social Exclusion at the London School of Economics. She’s also an IRP affiliate. Jane, thanks for joining us today.

Waldfogel [00:00:47] Thank you for having me.

Siers-Poisson [00:00:50] I’d like to start with what we mean by child benefits. What is a good basic definition of that type of program?

Waldfogel [00:00:58] Such a good question and it’s a question we have to ask because we don’t have this program in the United States. Sometimes they’re called child benefits, sometimes they’re called family allowances, sometimes they’re called child allowances. They’re benefits that go usually to all or nearly all families with children and think of them as being delivered month in and month out from the day the child is born until the child turns 18. And they’re benefits to help families with the cost of having children.

Siers-Poisson [00:01:28] Are there other types of programs that may seem similar but are not considered child benefits?

Waldfogel [00:01:35] Yes, in the U.S. context, I think a lot of people are familiar with the earned income tax credit and the child tax credit. So, the earned-income tax credit is a program that greatly expanded since welfare reform. And for low-income families who are working, it provides some additional tax credits that are available at tax time, so once a year, as a lump sum. So, those are for low income working families. And then the child tax credit, which is the closest thing we have to a child benefit in the United States. Again, once a year at tax time, a child benefit that goes to families with children. Crucially, the child tax credit doesn’t go to all low-income families. It goes to families that have enough earnings to meet the requirements for that program. So, it goes to middle income and high income families but leaves probably about a quarter or a third of American children out. And the children who are left out are the lowest income children whose parents don’t have sufficient earnings to qualify for a full child tax credit or in some cases for any child tax credits. So that’s the closest thing we have to a child benefit, but you can hear in the description that it’s not because it’s universal or near universal and it’s delivered only once a year as opposed to something that’s being delivered regularly month in and month out that families can count on with ongoing expenses.

Siers-Poisson [00:03:04] On the other hand, there is a long history of child benefits being used in other countries. Jane, can you give us some examples, particularly in countries that are of a similar economic level as the United States?

Waldfogel [00:03:16] In the book, I focus mainly on countries that are part of the Organization for Economic Cooperation and Development, the OECD. And so that’s the group of wealthy nations that are absolutely on a parallel with the United States. So, think  you know of France or think Netherlands or Canada nearby us or the UK or Australia or Sweden or Denmark, Germany, the wealthy countries that make up the OECD. And those countries have had these kinds of benefits going back, you know, more than a hundred years. And there was a movement that spread really around the world to provide these kinds of benefits to families with children. And unfortunately, we missed out on that movement in the United States and we’re, you know slowly but surely catching up. I hope we’ll get there one day but we haven’t caught up yet.

Siers-Poisson [00:04:09] Are there different types of structures that are used in those other countries to provide child benefits?

Waldfogel [00:04:15] Honestly, the structures are pretty similar across countries. Typically, the benefits are delivered month in and month out. In some countries, for example, the UK, the benefits could be delivered more often if a family is low income, because it’s a little bit easier. You could imagine if you’re a low-income family, if you could get the benefits every, say every two weeks instead of waiting and getting them just once a month. But no, the structures are pretty similar across countries

Siers-Poisson [00:04:44] I think I remember from your book that some countries kind of prioritize third or maybe fourth children if they’re really hoping to increase fertility. How common is that?

Waldfogel [00:04:55] I mean, when these benefits first started, some countries provided these benefits right away when you had a first child and then with each child, other countries thought, well, you know, a salary of a worker probably is enough to cover the first child maybe but doesn’t cover the second or third child. So, the benefits would be higher or would kick in only with higher numbers of children. And you’re right, some countries, you think countries like France, very pro-natalist, would try to incentivize having more children so they’d give you an extra benefit if you had even a larger family size. That’s somewhat gone out of fashion now and more countries than not simply provide a benefit right away once a child is born and provide a benefit for each child. What’s become more of a trend is to provide higher amounts of benefits for younger children. So, you know, way back when we used to think the bigger children were, the more expensive they were. And a teenager costs more to feed than a young child. And then we became aware of really how sensitive children are and how vulnerable they are in early childhood. And we also started thinking about all the things that young children need, whether it’s diapers or expensive childcare or strollers and all of that. And so, a lot of countries now provide higher benefits for the young children, preschoolers. And then the benefits, you know, stabilize once children are school age or teenage.

Siers-Poisson [00:06:26] Jane, you said that a lot of these countries have had these child benefit programs for decades and maybe even a century in some cases. As a non-researcher, that makes me wonder, how do you gauge how effective a benefit is if it’s been so constant and as you said, universal? Are there examples of where maybe a benefit changed for a few years and there can be comparisons made based on that?

Waldfogel [00:06:53] Yeah, I mean, countries are constantly innovating, and these policies are subject to political swings, as you could imagine. And so sometimes when a new government comes in, they think about, well, what can we do to become more popular? And you could think that it would make them more popular if they would provide larger benefits for families with children or additional benefits, say, for young children. And so fortunately, we have a lot of evidence from, as you were saying, when countries changed these policies. So, benefits are expanded, benefits are cut back. And so, we love those policy changes. Us social scientists, we call them natural experiments because benefits go up suddenly or they go down suddenly, not because of anything the family did, not because they increased work or decreased work or had more children, whatever, but because of something the government did, hundreds of miles away. And so, we have lots of these natural experiments and that’s the kind of evidence that I use in the book. And if you have one natural experiment, okay, I don’t know how much weight you can put on that, but when you start having dozens of these experiments in different countries over time, then you really start having a wealth of evidence. The other evidence we have is from the United States. We had a brief period in 2021 when we expanded our child tax credit. And we actually delivered it monthly, and we delivered it to all families with children. And that, again, was a natural experiment. It arose not because of anything that families did, but because we were coming out of COVID and Congress decided to make this child tax credit universal for six months and to deliver it monthly and to make it much more generous than it had been. And so, we have a lot of evidence from that experiment as well.

Siers-Poisson [00:08:43] That’s a perfect segue because I was going to say, now that we have a basic understanding of child benefit programs around the world, I’d like to turn to the U.S. And while we have not had one consistently, there are some early examples of what could be considered child benefit programs in this country. Could you tell us a little bit about those?

Waldfogel [00:09:05] I mean, the best evidence we have is from the expansion in 2021 when the child tax credit was made universal, was made more generous, it was delivered monthly. We also have a growing number of states that have child tax-credit programs, and some of them are starting to resemble child benefits. And then going back earlier in our history, we have programs that we now think of as being widespread, like food stamps or like Medicaid, that didn’t used to be in place and so we have historical evidence of when programs like that turned on and diffused and of course they didn’t turn on at the same time in every county in the United States they spread over time and so that gives us yet again a natural experiment that we can draw on. So yeah, we have lots of evidence from the United States.

Siers-Poisson [00:09:55] An early example is the mother’s pension. What was that?

Waldfogel [00:09:59] So the Mother’s Pension was a program that we had historically in the United States to help women who didn’t have a husband in the home, think, you know, widows and their children, widows and orphans. And, you know, administratively women would apply for the program and some women were accepted and got the benefit for their family and some woman just missed out. So, their incomes were just a little bit too high and so they missed out and they didn’t get a Mother’s Pension. Well, you can then fast forward decades later and look at the children of the women who got the benefit, who got their Mother’s Pension, and those whose mothers just missed out. And by looking at the difference in the outcomes for those children, you can back out what the effect of that program was. And so, researchers like Martha Bailey in California, wonderful historical researcher, had pieced together the data to be able to carry out these kinds of analyses, and have shown the benefits, the long-term benefits, for the children whose mothers received the Mother’s Pension as compared to very similar children whose mothers didn’t.

Siers-Poisson [00:11:09] So the expanded child tax credit in 2021 was a big change, as you said, to what the child tax credit had been previously. What specifically changed? And you said it lasted about six months.

Waldfogel [00:11:24] The expansion lasted for a year, and for six months, the benefit was delivered monthly. It was made almost universal, and it was made much more generous. And then in the second six months the higher generosity continued, and the universality continued, but the second 6 months benefit was delivered at tax time. So, think in a normal year, the child tax credit, all of it is delivered in a lump sum at tax-time. And during the expansion, for six months, families got a monthly benefit. And then they got a lump sum for the second six months.

Siers-Poisson [00:11:58] So let’s say a family with maybe a two-year-old and a 10-year-old, how different would their child tax credit receipt have been during that expansion?

Waldfogel [00:12:10] A two-year-old and a ten-year old, so for a preschool-aged child it was $3,600 per year, and for a school-aged-child it was 3,000 per year. So that’s $6,600 for the year. And if that family was low income, the lowest income 25 or 30% of American families, they went from zero to 6600, from zero. So, it’s a big increase. It’s a bigger increase.

Siers-Poisson [00:12:42] So you referred to situations like this where a policy changes and it’s not according to what a family might be doing, but what the government decides as a natural experiment. But I have to say, thinking back to that COVID period, that was a very unnatural time in our history. How much does that factor affect the kind of research and conclusions that you can make on that policy change?

Waldfogel [00:13:11] It’s such a good question. I mean, I think there’s really two issues with the 2021 expansion and drawing lessons from it. One is that it occurred during COVID, and so we just don’t know to what extent the effects that we saw or didn’t see might have been specific to COVID. They might be larger in a non-COVID world, they might be smaller in a none-COVD world. The other thing to keep in mind about 2021 is that everyone knew that that was temporary. That was a temporary expansion. If you think about how families reacted to that kind of windfall, did they react differently because they thought it was going to be temporary, it was going to go away, than if they really thought it would be a permanent benefit? In some ways I take that second point more seriously even than the COVID point, although the COVID is pretty important as well.

Siers-Poisson [00:14:04] While the child tax credit expansion was quite recent and it was a relatively short amount of time, what are researchers finding about the impacts on families and on bigger questions like the child poverty rate?

Waldfogel [00:14:18] Kind of the first-order question you want to think about with a child benefit like the 2021 expansion is, you know, did it reach families? Did it reduce material hardship? Did it reduce poverty? And the evidence on that is just resoundingly clear. The poverty rate in the United States, the child poverty rate fell in half during the 2021 expansion to the level of countries like Denmark and Finland. We’ve never had a child poverty rate as low as Denmark and Finland. And we also know that when the expansion ended, the child poverty rates doubled and went back to its old level. Likewise, the evidence around material hardship, and by material hardship, you know, we mean children being hungry, families not having enough money for food, for clothing, for housing, being behind on bills, having their utilities cut off. You know, we’re talking real hardship. We also know from the 2021 expansion how families spent the money. So, families spent money on items for children, books and toys and clothing. That’s absolutely consistent with the international evidence that families spent their money on items that are essential for families like food and housing costs. And that again is consistent with international evidence. So, the evidence is clear on its own and also very consistent with the international evidence.

Siers-Poisson [00:15:45] As with any large policy program with a significant price tag, there are questions related to who should receive a child benefit at what amount, under what conditions, or maybe with what requirements attached. I’d like to dig into the research on a few of those. You just talked about how parents spend the money. There is often an element to these policy debates about whether it’s going to be spent on things like alcohol or cigarettes or drugs. You say that the evidence is clear that the money is actually being spent on children. And we touched on the issue of fertility earlier, whether it encourages people to have more children or maybe whether to have children when there’s a child benefit available. What do we know about how fertility is affected by the availability of a child benefit?

Waldfogel [00:16:35] I mean, in some countries, fertility has been a really big issue in terms of child benefits. Countries have tried really hard to increase fertility, countries like France, countries in Asia, and child benefits have been one of the methods that they’ve tried. In general, it’s very hard to shift fertility. It’s very hard to induce people to have children or have more children. There’s a lot that goes into deciding to form a family and have children or have more children. And there are other big factors like housing costs or costs of childcare or the labor market. So, it’s proven very difficult to shift fertility with child benefits. The one exception is there is one type of policy, it’s not a child benefit, but a sort of one-off lump sum, they’re called birth grants. So, when you have a child, boom, you get this. Big payment and it could be 3,000 euros or $5,000 or it’s a big number and it attracts people’s attention and it’s a one-time payment so that’s why it’s not a child benefit. Those birth grants do seem to have some effect on fertility. When countries turn them on, families have more children than they otherwise would have. They have fewer abortions than they would otherwise have and when countries turn them off, the fertility rate goes back, goes down. So that is the one type of policy that seems to have an effect on fertility. You know, not a large effect, but it has some effect. That evidence is all from other countries. So, would a birth grant have as much effect on fertility in the United States? We really don’t know. We provide so much less in terms of paid leave and childcare and other supports. So it could be that a birth grant isn’t enough to shift fertility. It could be the opposite. Gee, we’re providing almost nothing and so a birth grant looks like a lot of money when you’re getting nothing else. We really don’t know, but the effects are modest and those are not effects of child benefits. Those are one specific type of program.

Siers-Poisson [00:18:45] Possibly the most consistent and significant issue raised in relation to child benefits and actually with other safety net and benefit programs as well, is what the effect will be on parental employment. Is there evidence that receiving a child benefit leads to a parent or parents reducing how much they work?

Waldfogel [00:19:05] The short answer is no, so in the book I reviewed, I think there were 12 or 13 studies done of the expansion in 2021 and, you know, remember during covid it was temporary, so there’s no caveats there. Almost all of those studies found no effects on employment. A couple of studies found some hints of effects, but the evidence was not consistent. You know, I think the way to look at it is there probably were a handful of families who might have cut back on their employment because they had young kids, they wanted to just be able to stay home with them, childcare was expensive. The little bit of extra money helped them do that. There may also have been a handful of families who were able to increase their work because they were able to afford childcare or get their car on the road or buy themselves a phone or something else that they needed for work. But the vast majority of families didn’t change their employment at all. And that’s, you know, the best evidence we have.

Siers-Poisson [00:20:06] Jane, I want to pause here to cover a couple of important aspects of the child tax credit that will be especially relevant when we talk about your policy recommendations. One is that, as you mentioned earlier, the neediest families are often left out of or receive less of the child tax credit benefit currently. That really seems counterintuitive. Can you explain the mechanism that causes that to happen?

Waldfogel [00:20:32] Yeah, so in the United States child tax credit, we have an earnings threshold, so you don’t start getting the credit until you earn a certain amount, and then the credit is phased in. So, the more you earn initially, the more credit you get until you reach the point where, okay, now we’ve incentivized work enough, and then it starts phasing out. So that’s a really common design feature of work-oriented programs for low-income families, the earned income tax credit or welfare work incentives. And it’s a piece of sort of confusion and error to have that applied to a child benefit, because a child benefit is not about incentivizing work for low income families. A child benefit is about providing an income floor for families with children so that whatever families do moving in and out of work or one person staying home, one person being ill, one person losing their job, there’s an income floor for families with children to support them being able to buy necessities for their children. So, it’s a design feature that is focused on work incentives, but really doesn’t belong in a child benefit program. And so, among all the OECD countries, we’re the only country that has a child tax credit that phases in like that and then phases out.

Siers-Poisson [00:22:00] The other is the issue of administrative burden and how that affects access to the child tax credit and other benefits for low-income families. First, can you define administrative burden for us and then give us an example within that child tax credit framework?

Waldfogel [00:22:18] So administrative burden is the idea that there are costs to claiming benefits and that those costs create a burden on recipients and they’re a loss to the recipients. They’re a loss to society. Ideally, you’d like things to be frictionless and seamless and for people just to be able to get the benefits that they’re entitled to. If you have a universal system of child benefits, it’s really straightforward. When the child is born and the birth is registered, the checks start going out. Do you know what I mean? There’s no application. You get the birth certificate; you get the checks. It’s sort of like you get your social security checks, I mean, if you’re at the other end of the age distribution. The child tax credit, even when it was expanded during 2021, there were some issues with it. It came through the tax system. So, people had to go to an IRS portal. I mean, I think, let’s give the IRS credit, they did a remarkable job of delivering that benefit. And they reached, I don’t know, something like 90% of eligible families with children, they did an incredible job. If you were already in the tax system, they sent your checks out automatically, you didn’t have to apply. But if you weren’t already in a tax system if you were not already receiving checks, who would that be? That’s the lowest income families. You did have to go into an IRS portal and apply. And just those words, you know, “go into an IRS portal, go into any portal and apply,” I get it. It strikes terror into all of our hearts, the idea of going to any kind of portal and applying. So that’s what administrative burden is. And we can get into the nitty gritty of what if you’re a child who spends part of the year with one parent and then part of the time with another parent, or something happens and you go live with your grandparents. Someone’s going to notify the IRS so that the check gets delivered to the right place and doesn’t get delivered to wrong place. So those are all aspects of administrative burden, but that’s the cost of doing business. And again, the IRS really did a remarkable job of getting these benefits out.

Siers-Poisson [00:24:33] I think many people would say that lowering rates of poverty and hardship and improving child and family well-being are top goals of a program like a child benefit. What does the research show about the impact of child benefits in other countries that have had or currently have a child benefits program in place?

Waldfogel [00:24:53] The evidence is pretty compelling, and it shouldn’t be surprising, that if you reduce poverty and hardship when children are young, give parents resources that they can spend on their children as they see fit because they know their children best and their children’s needs, that when you do that, when you look at the kids in young adulthood and later adulthood, you find that kids are, you know, they’re healthier, they’re more productive, they’re likely to be employed and paying taxes. Less likely to be involved in crime, less likely be claiming benefits themselves. So, the payoff is pretty big. My colleagues at Columbia, Irv Garfinkel and his team, who do cost benefit analyzes, these are their bread and butter. They estimate that the returns to these child benefits for every dollar that you spend today, you get back somewhere between $10 and $15 in future benefits. Because of these lasting health effects and wellbeing effects and higher rates of employment and all of those outcomes that we’ve just been talking about.

Siers-Poisson [00:25:58] While it was in place for a much shorter time, has research been done to assess that 2021 expanded child tax credit on those same aspects of poverty, hardship, and well-being?

Waldfogel [00:26:10] So for the 2021 expansion, we have a wealth of evidence on the effects of that expansion on poverty, hardship, how families spent the money, the lack of any negative incentives around work or any negative changes around employment. So, we have a wealth of evidence. We don’t have evidence about the long-run effects on children’s wellbeing because that was only 2021. We’re now 2025. So, we don’t yet have evidence about the long run benefits for those children when they become adults themselves.

Siers-Poisson [00:26:45] Thank you for giving us such a thorough overview of child benefits in similar countries, and here, as you’re able to talk about it. One of the final chapters in your book outlines recent proposals that would create a U.S. version of a child benefit. In broad terms, what are the main components of those and how do they differ?

Waldfogel [00:27:05] I think one of the most interesting things in doing the research for the book was discovering that there are proposals on both sides of the aisle for universal or near-universal child benefits, benefits that would be much more generous than what we have today in the child tax credit, benefits would be delivered monthly, benefits that would give higher benefits to families with young children. And there’s actually a lot of consensus across the aisle about the idea of putting more money in the hands of parents and letting parents decide how to spend that money in ways that will benefit their children. So, there’s a Democratic proposal, the American Family Act, there’s lot of convergence around that among Democrats, looks very similar to the 2021 expansion. But on the Republican side, there are a host of competing proposals that, if anything, would be more generous in dollar terms than the Democratic proposals. The rub on the Republican side is do you extend these benefits and make them universal? There are actually some Republicans who endorse the idea of including all families with children. And that group includes JD Vance, for example. So, in terms of influential Republicans, I guess you would count him as being kind of right up there. We don’t know where President Trump stands on that. He did say that he had doubled the value in his first term, and he would like to expand it further in this term. You have other Republicans who are honestly more traditional, more tied to thinking about welfare, welfare reform, who struggle with the idea of a universal benefit that’s not conditioned on employment. So, you know, I don’t want to misrepresent the Republican position or be overly rosy about it, but there are Republicans who are thinking about including all families with children and that is a debate and a conversation that could have been had this year with the renewal and the extension of the Tax Credit and Jobs Act. It’s a conversation that was not had because there was no conversation about any provisions of that bill because the Trump administration just pushed through what they wanted, and there was no opportunity for debate about that. And so, it’s really a shame because it was a missed opportunity. There is quite a bit of interest on both sides of the aisle. And so, it’s a conversation that will be had another day in another administration. It didn’t happen in this one.

Siers-Poisson [00:29:46] When there are discussions about a child benefit, is it viewed as separate from other safety net programs or is there sometimes a give and take proposed where this is going to have a big price tag, so we’re going to reduce some other benefits to help pay for it?

Waldfogel [00:30:04] Really important point, thank you for raising that. Yeah, it is a big point of distinction between the Democratic and the Republican proposals. On the Democratic proposals, there’s no idea that you would cut other benefits. The idea is that we have a set of benefits. We have a safety net, food stamps, Medicaid, WIC, Head Start, and yet we have the highest child poverty rate of pure countries, and we don’t have a child benefit. So, the child benefit would be in addition to the existing safety net. In the Republican proposals, not all of them, but in some of the Republican Proposals, there are provisions to pay for a child benefit by cutting other benefits. The minute you do that, you have to then make the child benefit a lot higher because you have to compensate for the other benefits that are being pulled out. So, it is a really important point.

Siers-Poisson [00:30:58] Jane, given what seems to have some traction potentially here in the U.S., and what your extensive research has shown works in other countries, what would your recommendations be for the most effective form of a U.S. child benefit?

Waldfogel [00:31:13] I think the 2021 expansion is a pretty good model. I think including all low-income families with children, delivering the benefit monthly, a higher benefit for families with young children than families with older children. I think those elements all work really well. I think that the IRS did a great job. Some people argue for the Social Security Administration to deliver the benefit instead. I think if we get to the point where we have agreement on all the provisions of a child benefit and then we’re just arguing about who’s going to deliver it, like, I don’t care, either way is fine with me, I’d be thrilled. So yeah, I think we kind of know what works, what elements we need. And so, it’s really just coming up with the political will to spend the money up front, knowing that we’ll recoup those benefits 10-fold, 15-fold in the long run.

Siers-Poisson [00:32:12] And as we wrap up, what is one thing that you wish policymakers and legislators understood about child benefits?

Waldfogel [00:32:21] I really wish they understood that these benefits are not welfare, that they are universal benefits for all families with children, and that they’re about giving families and parents more flexibility and more choice and more control, and it’s for all families with children and that thinking of them as welfare is really the wrong frame.

Siers-Poisson [00:32:46] Jane, thanks so much for taking the time to talk with us about your book. It’s a really interesting read and I really appreciate you discussing it with us.

Waldfogel [00:32:53] Thank you so much.

Siers-Poisson [00:32:56] Thanks so much to Jane Waldfogel for joining us to discuss her recently published book titled “Child Benefits, a Smart Investment for America’s Future.” You can find a link to the book in the program note for this episode. Please note that views expressed by our speakers don’t necessarily represent the opinions or policies of the Institute for Research on Poverty or of any other sponsor, including the University of Wisconsin-Madison. Music for the episode is by Poi Dog Pondering. Thanks for listening.