Tax Policy and Intergenerational Family Wellbeing

Session Submission Type: Panel

Abstract

Tax-based income supports, particularly the Earned Income Tax Credit (EITC) and refundable child tax credits, represent the largest public investments in low- and moderate-income families in the United States. Yet as federal policy debates intensify and states increasingly design their own tax credit structures, critical questions remain about how these policies shape family dynamics, child development, and long-run economic mobility. This panel brings together four papers that collectively examine the family-level effects of tax policy across multiple mechanisms, populations, and levels of government.

The first paper investigates whether EITC generosity crowds out private financial transfers from parents to their adult children, finding instead that public and private support are complementary, with EITC-induced increases in labor supply prompting greater parental financial and childcare assistance. The second paper examines how EITC and Medicaid jointly shape children's academic outcomes, using state-level policy variation to test whether these two large safety net programs interact in ways that amplify or constrain each other's effectiveness. The third paper presents early evidence from Colorado's Family Affordability Tax Credit (FATC), one of the most expansive state child tax credits in the country, documenting meaningful reductions in child poverty and improvements in financial stability, parental stress, and child well-being. The fourth paper takes a long-run view, using three decades of administrative data to trace the intergenerational effects of childhood EITC exposure, finding that improved neighborhood quality via increased mobility is a key pathway through which the credit accelerates adult earnings, employment, and mobility.

Together, these papers advance understanding of how federal and state tax policies interact with family systems, private support networks, complementary safety net programs, and residential contexts to influence family well-being. At a time when states face growing pressure to compensate for reductions in federal safety-net investments, this panel offers timely, rigorous evidence on what well-designed tax-based supports can achieve.

Policy Area

• Poverty and Income Policy

Chair

• Leah Hamilton, Appalachian State University

Discussants

• Bradley Hardy, Georgetown University

• Natasha Pilkauskas, University of Michigan Ann Arbor

Organizer

• Leah Hamilton, Appalachian State University

Individual Presentations

• How does the EITC affect financial assistance from parents? - Presenting Author: Anna Wiersma Strauss, Indiana University

• Do Earned Income Tax Credit and Medicaid interact to shape child well-being? - Presenting Author: Stephanie Hong, Stony Brook University

• Unlocking Opportunity: The Long-Term Effects of EITC-Led Migration on Families and Intergenerational Mobility - Presenting Author: Jacob Bastian, Rutgers University - New Brunswick

• Cash Transfers and Financial Inclusion: Evidence from the U.S. Earned Income Tax Credit - Presenting Author: Mardoche Ayitchehou, University of Pittsburgh