Dr. Katherine Michelmore, associate professor of public policy at the University of Michigan’s Gerald R. Ford School of Public Policy has been awarded the 2024 David N. Kershaw Award and Prize for her contributions as a leading scholar and educator on the social safety net, education policy, and labor economics. Michelmore will be recognized at the 2024 Association for Public Policy Analysis and Management (APPAM) Fall Research Conference. As the 24th recipient of the David N. Kershaw Award and Prize, Michelmore will deliver the Kershaw Lecture during the conference. The David N. Kershaw Award recognizes professionals who make significant contributions to the field of public policy analysis and management before the age of 40. Award recipients receive a $20,000 cash prize. David N. Kershaw, for whom the award is named, was the first president of Mathematica and helped guide the establishment of APPAM before his death from cancer at age 37. The award was created in 1983 in his memory and is jointly administered by Mathematica and APPAM. Michelmore spoke recently with Spotlight about the award and her most recent work; the transcript has been lightly edited for length and clarity.
First of all, congratulations on being awarded the Kershaw Award. I know you’ve done some recent work on the Child Tax Credit, but the award is for a body of work, correct?
My interests more broadly are about how social policy affects families. I’ve focused most of my career working on the Earned Income Tax credit. The Child Tax Credit has always been an interest of mine, but we haven’t had a lot of research done on it because the EITC has just had a lot more policy variation that’s made it easier for researchers to study its impact. The CTC has had fewer of those types of changes, with the 2021 expansion being the exception.
More specifically, when I started working on the EITC about 15 years ago, there was already a literature that was really expanding, but the big thing that we knew of at that time was that the EITC encourages single mothers to enter the labor force. There were lots of studies about that, but at that time, we didn’t know as much about one of my key interests, which was how is it affecting the children of the people who get the EITC? And so that’s where I really started my career, looking at the downstream effects of the EITC on children.
My dissertation focused on looking at the cumulative exposure that kids have to the EITC, which since it’s been around for almost 50 years now, has been exposed to kids in a lot of varied ways. I’ve seen estimates that suggest about half of all kids in the U.S. will get the EITC at some point in their life and so I was really interested in the dynamic piece too.
I had no idea that the number was that high. That’s amazing.
Exactly. It doesn’t sound like it goes up very far in the income distribution, but families that have income up to about $60,000 or $65,000 could be eligible for the EITC depending on how many kids are in the household. So, it does actually capture a large chunk of children in the U.S. and I was really interested in studying how your childhood exposure to the credit affects your later life outcomes. My first big research endeavor from grad school was looking at its effects on educational attainment and finding that if you’re exposed to larger credits in childhood, you’re more likely to complete high school. You’re more likely to go to college and complete a college degree and have higher earnings in early adulthood.
I’ve done some spinoff papers on that same kind of exposure dimension and found that it reduces teen fertility and leads to more broadly kind of a postponing of fertility in family formation among women that I think is primarily driven by this educational attainment piece.
So, the expanded CTC would be a natural area for you to look into.
Exactly. It was kind of fortuitous that after doing all this work on the EITC, the policy discussion began to focus much more about expanding the CTC in the last few years. And like you said, it was a really natural segue to studying the impact of the CTC. because it has a lot of similarities to the EITC.
Let’s talk about that study then and some of the key things that you found.
I have a few studies on this, but I’ll talk about kind of the main one that we have, which looks at the impact of the expansion of the CTC in 2021, which did a number of things. It made the credit much more generous by increasing the benefit from $2,000 per child to $3,000 per child. And for the first time, it provided a more generous credit for families with young children. If your kid was under six, you could get up to $3,600. It also removed the work requirements. Historically, over the last 20 to 25 years, we have really shifted how we distribute cash benefits to families and almost all of our policies require some kind of employment to receive benefits like the EITC. The Child Tax Credit has historically had a minimum income requirement to claim the benefit and so prior to the 2021 reform, about a third of the lowest income kids in the U.S. were not eligible for the full CTC benefit. With this 2021 reform, they removed the earnings requirement and essentially turned it into something close to a universal child allowance for one year. And then the last thing that was really interesting was that the policy was for the first time, in part, distributed on a monthly basis. A family, instead of getting one very large tax refund, received half the credit over a period of six months prior to tax filing.
Not surprisingly, researchers were eager to examine this policy variation and try to get some real time information about how it was affecting families. This was really relevant for public policy because while the expanded credit ultimately was not renewed, that debate likely will resurface in 2025, as some of the tax credit expansions that happened as part of the Trump era are going to expire.
For our study, my co-authors and I were lucky enough to get some real time data from this company called Propel, which makes an app for your phone for food stamp users to track in real time how much food stamp benefits they have. About a quarter of food stamp users used this app and Propel was already pushing out surveys to these families every month. And so essentially, we partnered with them, and they allowed us to tweak a few questions and add a couple of questions so that we could get some really rich information about how the credit was affecting families.
We focused on a number of what we call material hardship outcomes—food insecurity, whether you’re able to pay your bills, are you caught up on your rent, can you afford access to medical care. And what was nice about this data set that we had is that it provided more detailed information about some of these outcomes than was available in other surveys. And it was a large sample of specifically low-income families, which we really were interested in because these families historically were not eligible for the CTC.
The main thing that we found is that these families, while the monthly CTC was in place, were much less likely to report being food insecure; it reduced food insecurity by something close to 30%. For the other outcomes that we looked at, it wasn’t as clear, and I think this is consistent with what some other researchers have found. For instance, we did actually find a little bit of evidence that it reduced their level of housing and rent debt, but other studies didn’t really find a whole lot there. The big thing that we found was it reduced food insecurity among these low-income families.
And as you referenced, something has to happen with the CTC post-election because of the expiration of the Trump tax cuts. And it seems likely that if it is reinstituted, that there would be some sort of work requirement. I’m wondering if you came away from the study with any sense of how much that might limit the impact, if at all.
It’s really hard to say. On the one hand, we know that providing income to the lowest income families is beneficial and so I think that depending on how it’s structured, it has the potential to miss out on providing benefits to the lowest income children in the U.S. There have been discussions of other ways of structuring the work requirements to make it a little bit more generous for very low-income families. For instance, EITC benefits start accruing at your first dollar of earned income. So, families can start receiving benefits even if they have a very small amount of earnings.
Whereas for the CTC, the current minimum earnings requirement is $2,500, which doesn’t sound like a lot. But I’ve done work on this and others have shown that something like 6 million kids are in families that don’t meet that $2,500 threshold and that’s almost 10% of kids in the U.S. So, I think there are some real questions about whether you start phasing in the CTC at the first dollar of earnings versus having this minimum threshold and then start phasing it in.
The other thing I think I’ve heard discussed is phasing in the credit at a per child basis. Larger families actually have a harder time reaching the full CTC benefit level because essentially your earnings have to be higher to receive the full benefit if you have three kids than if you only have one or two kids. Under some proposals I’ve seen, once you meet the per child requirement, it benefits all of the children in your household. But I agree with you, I would be very surprised to see a CTC pass that does not have some kind of work plan.
How much did the study tell you about the impact of the monthly payout?
This is a question that I’ve been long interested in, but I don’t know that we have a clear answer on this. When you look at qualitative studies that interview people who got the EITC from before the CTC expansion, they say that people like getting a lump sum. It allows them to make bigger purchases that they wouldn’t have been able to do if they tried to save the money throughout the year. But I think alternatively there are also a lot of people who like getting monthly benefits because it just gives them a little bit of breathing room, so they know that they have that consistent amount of money coming in every month that takes the pressure off. I’ve seen evidence that the monthly payments really help families reduce food insecurity. And that is consistent with work that I have done too. It intuitively makes sense because improving food insecurity is a little bit easier to do with a small monthly payment than other types of insecurity, like getting caught up on past due rent. The lump sum can allow families to make more headway on reducing larger forms of debt. I don’t think it’s a straightforward answer—I think both are useful to people.
As we approach the next CTC debate, do you feel that there’s a consensus on any aspect of the impact of the expansion? For example, do you think there’s a research consensus on the impact on hunger and nutrition?
I’m hesitant to say that there’s a unified opinion on anything. But every study that I have seen that studies food insecurity has found reductions in food insecurity—that’s the one area. More broadly, I think we’ve seen evidence that the credit certainly reduces child poverty to some extent. But on pretty much all the other dimensions, there’s at least some disagreement. The two impacts I feel comfortable saying all studies have found evidence of is a reduction in child poverty and food insecurity.
And finally, given the, the arc of your research, you’ve spent a lot of time looking at the EITC, which if there’s any model for a bipartisan policy in D.C., that’s probably it. That has not been the case for the CTC. And I just, I wonder if you have any thoughts on why.
I would point to the CTC’s history, and it has been expanded under both Democratic and Republican administrations. So, I don’t think it’s quite fair to say that it’s not bipartisan. I think where there’s disagreement is on the details of what it looks like and who it goes to. I do think that we are in a very different political environment than when many of the big reforms to the EITC took place in the early 1990s. And I think that was during a time when there was a lot of political will on both sides to do something about the cash welfare program.
I think the CTC remains one of the few policies that has some bipartisan support, but I guess I would chalk up the differences in how we approach it to changes in the political environment. I think a lot of it hinges on this work requirement piece and differences in political opinion about whether we should be providing substantial cash benefits to people without requiring a work requirement.
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