The Effect of the 2021 CTC Expansion on Births: Evidence from a Natural Experiment

Nicolò Cavalli, Bocconi University
Chiara Allegri , Bocconi University
Maria Carla Fraioli, European Commission

In many high-income countries fertility softened during COVID-19, renewing interest in whether family benefits can buffer uncertainty. We examine the 2021 expansion of the U.S. Child Tax Credit (CTC), a temporary, near-unconditional cash transfer, to identify its effect on births through a natural experiment. Using National Center for Health Statistics natality data (2015–2022), we estimate negative binomial models of birth counts with demographic controls and month and year fixed effects, comparing higher-order births with first births. During the expansion window, expected birth counts rose by 2.8% for higher-parity births relative to first births. The implied aggregate effect is 32,000 additional births during the policy months (95% CI ˜ 2,355–61,176). Heterogeneity analyses indicate that the response is concentrated at third-and-higher parities. Positive effects are evident among college-educated mothers at lower parities when at least one child is already present, whereas for larger families responses are stronger among less-educated mothers. By leveraging a well-defined, time-limited income shock, this paper provides evidence that modest cash transfers can temporarily raise births at higher parities even amid macroeconomic uncertainty. Our findings inform debates on the design of child benefits as tools to support reproductive goals and mitigate fertility decline in advanced economies.

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 Presented in Session 41. Fertility, Family Policies and Labour Markets