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Abstract In 2021, Congress passed and President Biden signed a major, but temporary, reform to the Child Tax Credit (CTC). Among other reforms to the credit, the American Rescue Plan Act (ARPA) made it available to non-workers on the same basis as workers. Attempts to make this reform permanent foundered, in part, due to opposition from policymakers who worried that the new credit would lead workers to withdraw from the labor force and otherwise discourage work. These concerns drew strength from a working paper by a team of economists at the University of Chicago, published that fall, that predicted that making the ARPA CTC permanent would lead nearly 1.5 million parents to leave employment, most of them lower-income single mothers.(Corinth et al., 2021/22)

Critics of the paper have focused on the assumptions its authors made about the sensitivity of single mothers’ employment decisions to changes in work incentives. Debate has revolved around the magnitude of a labor supply elasticity specifying the percentage change in employment for a given percentage change in the return to work. Supporters of the ARPA CTC have charged that the elasticity assumed by Corinth et al. for low-income single mothers, 0.75, is too large and stands in contrast to the available evidence.