Counting Children Fully in Economic Impact Payments and Other Cash Assistance Policies Matters for Poverty Reduction
Among the more prominent federal policy responses to the COVID-19 pandemic were Economic Impact Payments (EIPs): cash payments in 2020 and 2021 for flexible use made available to most households with incomes under $150,000. There are several policy design issues to consider when creating EIPs, and these also apply to other forms of automatic stabilizers or direct cash payments to households. One critical aspect is how the structure of direct payments handles the benefit values assigned to adults compared to the benefit values assigned to children.
This brief examines the potential poverty reduction impacts of including versus not including children in the full benefit amount in direct cash payments. We use the 2021 $1,400 per capita EIP as an illustrative example. Our goal is to assess whether and to what extent treating children as full recipients when administering EIPs and other direct payments makes a difference in reducing poverty among those who struggle the most to make ends meet and who are often particularly vulnerable in economic downturns.
Key Findings
The multiple rounds of Economic Impact Payments (EIPs) delivered during the pandemic treated children differently: children were initially allocated substantially smaller benefits than adults, though they were later treated equally and received full per capita payments.
In 2021, a $1,400 per capita EIP that counted children as full people was delivered to families across the country. Had children not been eligible for these payments in full, the effect of a $1,400 EIP on the poverty rate would have been greatly diminished.
Policy design matters: counting children fully in cash payments has a significant impact on poverty reduction rates.
Suggested Citation
Lee, Jiwan, Sophie Collyer, Megan Curran, David Harris, and Christopher Wimer 2023. “Counting children fully in Economic Impact Payments and other cash assistance policies matters for poverty reduction.” Poverty and Social Policy Brief, vol. 7, no. 5. Center on Poverty and Social Policy, Columbia University.
Access at www.povertycenter.columbia.edu/publication/2023/count-children-fully-in-cash-assistance