2026 Theses Doctoral

Three Papers on the Distributional Consequences of Family Tax Policy

Collyer, Sophie M.

Chapter 1
Over the past half century, substantial government investment in families and children has been distributed through the tax system by way of the head of household and joint filing statuses, dependent exemptions, and various tax credits. Despite providing meaningful support, these tax expenditures are less visible than direct spending programs, and prior research has not quantified their combined value at the child level or how it varies across the income distribution over time or by family type. Using the Current Population Survey data representative of 1967 - 2023, I estimate average per-child benefits from family tax policies by year, income quartile, and family type. Prior to 1990, these policies delivered the greatest support to children in the top income quartile, particularly those in married single-earner families. Expansions of tax credits beginning in the late 1980s disproportionately benefited children in lower- and middle-income families, leading per-child benefits across quartiles to converge. More recent reforms, however, have again shifted the largest benefits to children in the top quartile, with married single-earner families continuing to receive the most support. In 2023, average benefits for children in high-income, married single-earner families reached $8,000 per child – more than 2.5 times those for children in lower-income families ($3,000) – driven in part by 2017 tax reforms. Decomposition analyses indicate that variation in these benefits over time is largely explained by policy changes rather than demographic shifts, though rising income inequality has further raised the value of these benefits for children in high-income, married single-earner families. These results inform our broader understanding of public policies supporting families and children, and where the benefits of those policies are concentrated.

Chapter 2
Federal social policies supporting children and families are delivered through both social programs and tax policies. Prior analyses of the distribution of benefits from these policies have largely focused on social programs, with less attention to the combined effects of social programs and tax policies. Using data from the 2020 CPS-ASEC (representing calendar year 2019), this study examines how per-child benefits from the largest federal social programs and tax expenditures vary across the family income distribution. Data are adjusted to align estimated benefits with administrative totals. Results show that these policies benefit children across income levels and have a bimodal distribution: children in the lowest- and highest-income families receive the largest per-child benefits. Benefits for children in poverty are more often delivered in-kind while benefits for children in the highest-income families primarily increase post-tax cash income. When excluding benefits associated with Medicaid, the benefits to children are similar for all children except those in the highest-income families, for whom they are greater.

Chapter 3
This study examines whether and how the effects of family income on children’s long-term educational and employment outcomes vary across the income distribution. I use a simulated instrument to identify exogenous variation in family income, exploiting substantial changes in post-tax income resulting from legislated reforms to the federal income tax. Using data from the 1970–2021 waves of the Panel Study of Income Dynamics (PSID), I estimate the long-term effects of these income changes on children’s outcomes. To capture potential non-linearities, I employ a control function approach that allows the effects of income to differ across the income distribution, enabling comparisons between children from lower-, middle-, and higher-income families. The results indicate that additional income increases educational attainment and earnings for children from low-income families and raises college attendance and completion for those from middle-income families. Effects for children from higher-income families are significantly lower and, in most cases, statistically indistinguishable from zero.