Working Paper: NBER ID: w27717
Authors: Jacob Bastian; Lance Lochner
Abstract: Parents spend considerable sums investing in their children's development, with their own time among the most important forms of investment. Given well-documented effects of the Earned Income Tax Credit (EITC) on maternal labor supply, it is natural to ask how the EITC affects other time allocation decisions, especially time with children. We use the American Time Use Surveys to study the effects of EITC expansions since 2003 on time devoted to a broad array of activities, with considerable attention to the amount and nature of time spent with children. Our results confirm prior evidence that the EITC increases maternal work and reduces time devoted to home production and leisure, especially among unmarried women. More novel, we show that the EITC also reduces time spent with children; however, almost none of this reduction comes from time devoted to active investment-related activities that are most likely to foster child development.
Keywords: EITC; Maternal Time Use; Child Development; Labor Supply
JEL Codes: D13; H24; H31; H53; I31; I38; J13; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| EITC expansions (H31) | maternal labor supply (J22) |
| EITC expansions (H31) | time allocated to home production (D13) |
| EITC expansions (H31) | leisure activities (L83) |
| EITC expansions (H31) | time spent with children (J22) |
| EITC expansions (H31) | time spent in non-investment activities with children (D13) |
| EITC expansions (H31) | time spent in active investment activities with children (J22) |
| increase in maximum EITC benefits (H31) | increase in weekly work hours (J22) |