Last week, millions of families received their first monthly payment of the expanded child tax credit, a policy meant to stabilize families with children after more than a year of economic upheaval due to the coronavirus pandemic. Experts say such cash transfer programs have the potential to radically improve the lives of young children by providing money for housing, food and childcare, among other needs. Some studies have found that cash transfers help support infants’ health and growth, improve children’s cognitive development and even reduce violence against children, possibly by decreasing stress experienced by parents.
But not every cash transfer program produces these outcomes, according to a new report published by the Behavioral Science & Policy Association, which underscored that how a program is structured influences its impact.
The report found that a key aspect of successful cash transfer programs is that they are unconditional, as opposed to conditional programs where parents are required to attend a program or seek employment, for example. This is also what makes the child tax credit in particular stand out from “other well-intended U.S. social policies like food or child care subsidies,” Lisa Gennetian, co-author of the report and a professor of early learning policy at Duke University, said in a statement. Unconditional cash transfer programs “improve life outcomes and economic security…without adding cognitive burdens on parents,” the report found. (These programs also have relatively low administrative costs, the authors of the report said.)
Here are the main elements of successful cash transfer programs, according to the report:
- An easy-to-access delivery system, such as debit cards
- A predictable schedule for delivering cash and transparency regarding the amount
- A low administrative burden on recipients
- Transfers timed with sensitive times of child development, such as after childbirth or during infancy, the preschool years or the onset of adolescence
The child tax credit meets several of these criteria in that it is administered with few conditions or restrictions and on a predictable schedule, said Gennetian. Still, some families will be ineligible based on income or age requirements of children and many of the lowest wage earners who aren’t known to the IRS could miss out if they do not sign up for the program.
By increasing household income, successful cash transfer programs “may enable parents to increase investments in child health and development and take advantage of other available support programs. And, by lowering the stress that accompanies scarcity, they may enable caregivers to make better decisions for themselves and their children,” the report said.
Lowering parental stress is important as this stress can trickle down to children, impacting brain development during formative early childhood years. Last year, another report found that although the pandemic is increasing stress levels and depressive symptoms among parents, having a reliable source of income can mitigate the effects and ensure parents have the capacity to nurture and care for their children. That report found that parents who lost their jobs but retained a household income were less likely to lose their temper and more likely to engage in positive interactions with their child.
You can read the full report from the Behavioral Science & Policy Association here.
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This story about cash for families with children was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.