Working Paper: NBER ID: w18206
Authors: Hilary W. Hoynes; Douglas L. Miller; David Simon
Abstract: This paper evaluates the health impact of a central piece in the U.S. safety net for families with children: the Earned Income Tax Credit. Using tax-reform induced variation in the federal EITC, we examine the impact of the credit on infant health outcomes. We find that increased EITC income reduces the incidence of low birth weight and increases mean birth weight. For single low education (<= 12 years) mothers, a policy-induced treatment on the treated increase of $1000 in EITC income is associated with 6.7 to 10.8% reduction in the low birth weight rate, with larger impacts for births to African American mothers. These impacts are evident with difference-in-difference models and event study analyses. Our results suggest that part of the mechanism for this improvement in birth outcomes is the result of more prenatal care and less negative health behaviors (smoking). We find little role for changes in health insurance. We contribute to the literature by establishing that an exogenous increase in income can improve health, and illustrating a health impact of a non-health program. More generally, we demonstrate the potential for positive external benefits of the social safety net.
Keywords: Earned Income Tax Credit; Infant Health; Low Birth Weight; Public Policy
JEL Codes: H2; H51; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduced Negative Health Behaviors (I12) | Improved Birth Outcomes (J13) |
| Increased EITC Income (H31) | Low Birth Weight (J13) |
| Increased EITC Income (H31) | Mean Birth Weight Improvement (I14) |
| Increased EITC Income (H31) | Increased Prenatal Care (J13) |
| Increased EITC Income (H31) | Reduced Negative Health Behaviors (I12) |