Impact of 2021 Expanded Child Tax Credit on US Birth Outcomes

Overview

The 2021 expanded Child Tax Credit (CTC) monthly cash transfers during pregnancy were associated with significant reductions in adverse birth outcomes in the United States. Specifically, a $1000 increase in pregnancy CTC eligibility correlated with a 6.7% decrease in small for gestational age (SGA) births and an 8.2% decrease in low birth weight (LBW) births.

Background

In 2021, the American Rescue Plan Act expanded the Child Tax Credit by increasing benefit amounts and distributing half as monthly payments, lifting millions of children out of poverty. Cash transfers during pregnancy are hypothesized to improve birth outcomes by enhancing nutrition, reducing financial stress, and improving maternal mental health. However, prior evidence on cash transfers’ effects on birth outcomes in the US has been mixed, with some studies showing modest benefits and others showing no effect or conflicting results. The temporary monthly payments of the expanded CTC provide a natural experiment to assess these impacts while controlling for confounders such as the COVID-19 pandemic and other social safety net programs.

Data Highlights

Key Findings

• A $1000 increase in total pregnancy CTC eligibility was associated with a 0.72 percentage point decrease in SGA births, representing a 6.7% reduction.
• The same increase was associated with a 0.49 percentage point decrease in LBW births, an 8.2% reduction.
• Associations were strongest among non-Hispanic White mothers and smallest among foreign-born Hispanic mothers.
• Results controlled for time-dependent autocorrelation, individual characteristics, COVID-19 hospitalizations, and other pandemic-era safety net programs.
• Findings align with prior evidence that cash transfers during pregnancy moderately reduce adverse birth outcomes.

Clinical Implications

Monthly cash transfers to pregnant individuals, such as those provided by the expanded CTC, may contribute to improved birth outcomes by reducing rates of SGA and LBW infants. Clinicians and policymakers should consider the potential benefits of regular income support during pregnancy as part of strategies to improve maternal and infant health, especially in populations at risk for adverse outcomes.

Conclusion

The 2021 expanded Child Tax Credit monthly payments during pregnancy were associated with meaningful reductions in adverse birth outcomes, supporting the role of income support programs in promoting healthier births.

References

1. American Rescue Plan Act (2021) -- Expanded Child Tax Credit
2. Bruckner et al. -- Study on EITC and birth outcomes
3. Prior studies on cash transfers and birth outcomes