Working Paper: NBER ID: w28041
Authors: Diane Whitmore Schanzenbach; Michael R. Strain
Abstract: The Earned Income Tax Credit (EITC) is the cornerstone U.S. anti-poverty program for families with children, typically lifting millions of children out of poverty each year. Targeted to low-income households with children, and only available to those who work, the EITC contains strong incentives for non-workers to become employed. Most of the existing economics literature focuses on federal EITC expansions in the 1980s and 1990s. This paper takes a longer view, studying all federal expansions since the program’s inception in 1975. We find robust evidence that EITC expansions increase the extensive margin of labor supply.
Keywords: Earned Income Tax Credit; EITC; Labor Supply; Employment Effects; Poverty Reduction
JEL Codes: H2; J08; J2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| EITC introduction in 1975 (H26) | Employment rates among lower-educated unmarried mothers (J12) |
| EITC expansion in 1986 (H31) | Employment rates among lower-educated unmarried mothers (J12) |
| EITC expansion in 1990 (H31) | Employment rates among lower-educated unmarried mothers (J12) |
| EITC expansion in 1993 (H31) | Employment rates among lower-educated unmarried mothers (J12) |
| $1,000 increase in EITC credit (H31) | Employment rates among unmarried mothers with low levels of education (J12) |
| EITC effects (H31) | Employment rates among unmarried mothers with low levels of education (J12) |