The Earned Income Tax Credit and Transfer Programs: A Study of Labor Market and Program Participation

Dickert, Stacy; Houser, Scott; Scholz, John Karl

doi:10.1086/tpe.9.20061826

Cited by 132 publications

(119 citation statements)

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“…Finally, because the EITC may theoretically affect fertility through changes in opportunity cost, as discussed in detail in section III, it is worth pointing out that there is substantial evidence that the EITC influences womens' labor supply The literature shows that expansions in the EITC increased participation in the labor market for single mothers (Eissa and Liebman 1996;Hotz et al 2006;Meyer and Rosenbaum 2000;Dickert et al 1995) and decreased the labor supply of married women (Eissa and Hoynes 2004;Dickert et al 1995).…”

Section: The Eitc and Labor Supplymentioning

confidence: 99%

“…The framework used to estimate changes in the labor supply of single parents identifies the effect of the EITC by assuming that the presence of a child is exogenous to the value of the EITC (Dickert et al 1995;Eissa and Liebman 1996;Hotz et al 2006, Meyer andRosenbaum 2000). To our knowledge, no previous studies consider the validity of this assumption.…”

Section: Introductionmentioning

confidence: 99%

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The earned income tax credit and fertility

2007

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Government programs designed to provide income safety nets or to encourage work often restrict eligibility to families with children, in an attempt to keep the programs well targeted. One potentially unintended consequence of the design of these programs is that if they lower the costs associated with having children, economic theory suggests that they may encourage childbearing. This paper considers whether dramatically changing incentives in the Earned Income Tax Credit (EITC) affect fertility rates in the United States. We use birth certificate data spanning the period 1990 to 1999 to test whether expansions in the credit influenced birthrate among targeted families. While economic theory would predict that a positive fertility effect of the program for many eligible women, our baseline models show that expanding the credit produced only extremely small reductions in higher-order fertility among white women. We also find evidence that suggests changes in marriage patterns may be related to changing fertility rates. For example, higher levels of the EITC are associated with higher first birth rates among married women and lower first births among unmarried women. This may suggest that the EITC encouraged marriage among single women. ‡ Thanks to Gabrielle Chapman, Cristian Meghea and Karoline Mortenson for excellent research assistance. We are also grateful to

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Section: The Eitc and Labor Supplymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The earned income tax credit and fertility

2007

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“…Because the EITC is a federal program, these studies have tended to rely on variation in the program over time Liebman, 1996, Meyer andRosenbaum, 2001), or on variation within the program across families Hoynes, 1998, Dickert, Houser andScholz, 1995). Hotz and Scholz (2003) summarize the findings from these and other studies and draw the following broad conclusions: the EITC positively affects labour force participation of single-parent households and these effects are substantial.…”

Section: Introductionmentioning

confidence: 99%

The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit program

Milligan

Stabile

2007

Journal of Public Economics

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In 1998, the Canadian government introduced a new child tax credit. The innovation in the program was its integration with social assistance (welfare). Some provinces agreed to subtract the new federally-paid benefits from provincially-paid social assistance, partially lowering the welfare wall.Three provinces did not integrate benefits, providing a quasi-experimental framework for estimation.We find large changes in social assistance take-up and employment in provinces that provided the labour market incentives to do so. In our sample, the integration of benefits can account for around one third of the total decline in social assistance receipt between 1997 and 2000.

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“…As a matter of fact, empirical studies find that the EITC expansions had heterogeneous effects on the labor supply, depending on the family composition. On the one hand, Dickert et al (1995), Eissa and Liebman (1996), Ellwood (2000) and Meier andRosenbaum (2000, 2001) show that the EITC reforms increased the workforce participation of single women with children, since it made work more attractive. On the other hand, Ellwood (2000) and Eissa and Hoynes (2004) find that the EITC expansion between 1984 and 1996 reduced the total family labor supply of married couples.…”

Section: Introductionmentioning

confidence: 99%

“…On the other hand, Ellwood (2000) and Eissa and Hoynes (2004) find that the EITC expansion between 1984 and 1996 reduced the total family labor supply of married couples. As the EITC is based on family income, it generates adverse effects on participation decisions of the secondary family earners (Dickert et al, 1995) in the phase-out region. Overall, the positive effect on labor force participation seems to be large enough to offset the negative impact at the intensive margin in working hours (Scholz, 1996).…”

Section: Introductionmentioning

confidence: 99%

A welfare evaluation of the 1986 tax reform for married couples in the United States

Picchio

Valletta

2017

Int Tax Public Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We propose an evaluation of the impact of TRA86 on well-being using different welfare metrics which fully retain preference heterogeneity. We estimate utility functions with preference heterogeneity on the basis of structural models of family labor supply. Then, by way of these estimated preferences, we compute several welfare rankings corresponding to different ethical priors. Finally, we identify the losers and the winners of TRA86 under different ethical priors.JEL Classification: C25, D63, H22, H31, J22

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The Earned Income Tax Credit and Transfer Programs: A Study of Labor Market and Program Participation

Cited by 132 publications

References 20 publications

The earned income tax credit and fertility

The earned income tax credit and fertility

The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit program

A welfare evaluation of the 1986 tax reform for married couples in the United States

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