Working Paper: NBER ID: w31429
Authors: Nicardo S. McInnis; Katherine Michelmore; Natasha Pilkauskas
Abstract: This paper examines the intergenerational effects of the Earned Income Tax Credit (EITC) on poverty and public assistance use. Using data from the PSID, we find that increased exposure to the EITC in childhood reduces the use of public assistance in adulthood (WIC and other public assistance) and reduces the likelihood of being in poverty (<100% of poverty) or near poor (<200% of poverty) by about 7 percentage points. These findings build on a growing literature that considers the intergenerational impacts of public policy and suggests that the economic benefits of policies in one generation may have long-term effects on the next generation.
Keywords: No keywords provided
JEL Codes: H20; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased childhood EITC exposure (I24) | reduced adult poverty (I32) |
| increased childhood EITC exposure (I24) | reduced public assistance use (I38) |
| $1,000 increase in average annual EITC exposure (H31) | increased likelihood of having earnings above the poverty threshold (I32) |
| increased EITC exposure (H31) | increased employment rates between ages 25 and 45 (J29) |
| increased EITC exposure at younger ages (H31) | more pronounced effects on economic outcomes (F69) |
| increased EITC exposure (H31) | limited impact on those in bottom income quartile (F61) |