Unconditional cash income and involvement with child protective services: Evidence from the expanded child tax credit

PROJECT SUMMARY/ABSTRACT The social costs of child abuse and neglect are staggering, with the lifetime economic burden of one year of child protective services (CPS) cases reaching an estimated $592 billion. It is well-established that low- income and poverty are strongly correlated with CPS involvement. Studies have shown that increasing income is associated lower rates of CPS involvement, with some evidence that this relationship is causal in nature. Yet, this research is limited in two critical aspects. First, all the causal studies to date evaluate the effect of additional income received from work-conditioned income via tax credits, meaning that the additional income is conditional upon parental employment. Economic theory suggests that income received via unconditional tax credits should lead to lower rates of CPS involvement because it can increase parental investments without decreasing parental time with children and because the most disadvantaged under- and unemployed parents are categorically excluded from existing work-conditioned credits. Second, as minoritized families are disproportionately both involved with CPS and un- or under- employed, a key question is whether the effects of unconditional cash transfers reduce well known racial disparities in CPS involvement. Our team’s recent microsimulation study found that an unconditional cash transfer would nearly eliminate racial disproportionality in CPS involvement. Yet, the average and race- specific causal effects of unconditional cash transfers on CPS involvement and the mechanisms underlying this relation remain unknown. That is the gap our proposed research aims to fill. To answer this question, we propose to evaluate the effects of the unconditional income received by families as part of the 2021 American Rescue Plan Act expanded child tax credit (CTC), the nation’s first monthly child allowance-type unconditional cash transfer. We innovate by using population-level linked administrative data that will enable us to longitudinally observe CPS involvement and other aspects of objective child health and safety, including relatively rare outcomes, and many parent- and child-level mechanisms that plausibly underlie this relationship. Aim 1 evaluates the effect of an unconditional cash transfer via the expanded CTC on CPS involvement and other objective measures of safety and wellbeing among infants. Aim 2 considers the CTC’s effects on children ages 1 to 17 and Aim 3 tests for racial/ethnic differences. All three aims include an exploratory analysis of mechanisms. This study will provide the first rigorous evidence for policymakers and practitioners on the value of unconditional cash income to reduce CPS involvement and reduce racial disparities therein. Our results will shed light on the nuances in poverty policy design that are imperative for equitable transmission of health and safety for children, providing novel insight into the ways that economic supports do or do not reduce racial disparities in CPS involvement.