UC San Diego

In three essays, I develop causal evidence on how taxes and transfers affect the behavior of low-income households. Chapter 1 discusses the Child Tax Credit (CTC), a major US tax provision that has received relatively little research attention. I identify the effects of the CTC on labor supply using a difference-in-discontinuities design, exploiting the fact that parents lose eligibility for a child’s credit when that child turns 17. Focusing on lower-income households in the Survey of Income and Program Participation, I find that loss of the credit leads to an 8.4 percentage point reduction in the probability a child's parents are employed. The implied elasticity is at the upper bound of previous studies, consistent with a response to a temporary tax change.

Traditional transfer programs in the United States provide few benefits to childless adults, so little is known about the effects of these policies on able-bodied adults without dependents (ABAWDs). In Chapter 2, I examine a novel source of variation in the SNAP (Food Stamps) program, in which unemployed ABAWDs have differential eligibility based a discontinuity in their local area's unemployment rate. I find causal evidence that removing SNAP work requirements decreases hours worked, but also reduces homelessness and property crimes. These findings help inform debates about basic income programs and related policies.

In Chapter 3 (joint work with Chelsea Swete) we examine taxation of diapers, usually seen as an inelastic health product, and find substantial income heterogeneity in responsiveness to taxes using retail scanner data. Exploiting changes to sales tax exemptions for diapers in New York and Connecticut, we find that diaper sales rise by 5.4% in low-income areas when taxes are removed, accompanied by reduced spending on children's pain medications. These results imply that sales tax exemptions for diapers can have positive spillover effects on health and well-being.

Taken together, this research helps inform policymakers about the broader effects of taxes and safety net programs on low-income Americans.