Child Tax Credit Purchasing Power and Short-Term Changes in Parental Time Allocation: Evidence from American Time Use Data

The Child Tax Credit (CTC) provides financial relief to families with children, yet little is known about how this policy shapes parental time allocation. This study investigates the effect of the 2017 CTC expansion using a difference-indifferences framework. Because the CTC provides a uniform dollar amount regardless of where families live, its practical value varies geographically: the same credit goes further in counties where childcare is relatively affordable than where it consumes a large share of household income. We exploit this variation in the credit’s real purchasing power to identify behavioral responses to the reform. Drawing on the American Time Use Survey (2008–2021), we find that parents in counties where the credit provided greater financial relief reduce their involvement in childcare and household tasks while gaining leisure time. This pattern is especially pronounced among mothers, who show significant reductions in basic caregiving activities such as feeding and bathing, alongside meaningful gains in socializing. Importantly, educational and recreational parent-child interactions remain unaffected, suggesting limited consequences for children’s cognitive development. Heterogeneity analyses indicate that the estimated reduction in parent-child time is most prominent among Hispanic parents, those without a college degree, and low-income families, with implications for the design of child-focused transfer programs. JEL Classification Codes: D13, H24, H31, J13, J22