Parental Time Use Amid Changing Incentives: Implications for the Design of Income Support Policies

• In Event: Children, Poverty, and the Safety Net

Abstract

While there is a large body of research that examines how social programs affect parental employment, we know much less about the shifts that parents make on unpaid activities, such as caregiving, leisure, or housework. Often implied, though with limited evidence, is the view that departures from paid work – especially among able-bodied adults - are likely directed towards relatively unproductive activities. Our paper aims to better understand these wider time use shifts, both in terms of what activities parents substitute away from as they work more, and the activities parents spend more time on when they work less. We do so by extending the employment model in Wiersma Strauss et al. (2025) to examine how parental time use across nine different categories responds to changes in the return to work (RTW) and nonlabor income. We use 1997-2023 data from the Panel Study of Income Dynamics (PSID). While we estimate that all parental groups increase time spent on paid work as the RTW increases and decrease time spent on paid work as nonlabor income increases, we find differences across parental groups in terms of both the magnitude of these effects – with married fathers less responsive than married and unmarried mothers - and time use adjustment patterns. Changes in time use are concentrated among time spent on paid work, childcare, and housework. To demonstrate the implications of these results for the design and evaluation of existing income support policies, we use these estimated parameters to simulate the time use effects of restoring the American Rescue Plan Act (ARPA) of 2021 version of the Child Tax Credit (CTC). This boosted the maximum credit amount and made it “fully refundable” during 2021 only, meaning the full credit was available to the lowest income families, including those without any earned income or taxes owed. This change nearly halved the 2021 child poverty rate. However, eliminating the phase-in of the refundable credit with earnings and the substantial increase in unconditional income reversed the CTC’s work incentive for lower-income households, precipitating a debate about the trade-offs between expanding the credit for the lowest-income families and incentivizing paid work. We estimate that restoring the fully refundable ARPA CTC benefit schedule would lead to small reductions to the time parents work. Specifically, we find that on average, married parents would reduce the time they dedicate to paid work by less than an hour during a typical week, equivalent to decreases of 1.7% and 2.2% of reported time for married fathers and mothers, respectively. Unmarried mothers would work about two fewer hours on average during a typical week (decrease of 6.3% of reported time). Restoration of the ARPA CTC would instead primarily increase the time married parents spend on childcare and housework. Unmarried mothers would also increase their time caregiving, especially for children. Our results thus demonstrate that in general, parents substitute toward activities with relatively high potential social (and private) returns – such as caregiving – when they choose to work less.

Author

• Anna Wiersma Strauss, Indiana University
  Presenting Author