Interaction effects of a child tax credit, national health insurance, and assured child support

Abstract

If the government offered a refundable tax credit for children, national health insurance, and an assured child support benefit to all families with children - poor families as well as nonpoor families - what would happen to poverty, welfare dependency, and other related issues? The authors simulate the effects of each program operating on its own and of all three acting in concert. They find that the impacts of the programs interacting with one another would be much larger than the sum of the impacts produced by each program alone. With the three programs in place, the poverty rate would fall by 43 percent, the AFDC caseload would shrink by 22 percent, and the annual incomes of poor families would rise by $2500. In addition, AFDC recipients would work more hours. Data come from the 1987 Survey of Income and Program Participation.