The EITC, Tax Refunds, and Unemployment Spells

LaLumia, Sara

doi:10.1257/pol.5.2.188

Cited by 45 publications

(32 citation statements)

References 57 publications

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“…We examine the differences in the associations by trimester of exposure for all health outcomes. In these models, we assume that families receive EITC payments on March 1, since three‐quarters of payments are received in February or March . Children born between March and May are exposed in the third trimester; those born in June–August are exposed in the second trimester; those born in September–November are exposed in the first trimester; and those born in December–February are exposed during the pre‐conception period.…”

Section: Methodsmentioning

confidence: 99%

Poverty, Pregnancy, and Birth Outcomes: A Study of the Earned Income Tax Credit

Hamad

Rehkopf

2015

Paediatric Perinatal Epid

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Background Economic interventions are increasingly recognized as a mechanism to address perinatal health outcomes among disadvantaged groups. In the United States, the earned income tax credit (EITC) is the largest poverty alleviation program. Little is known about its effects on perinatal health among recipients and their children. We exploit quasi-random variation in the size of EITC payments over time to examine the effects of income on perinatal health. Methods The study sample includes women surveyed in the 1979 National Longitudinal Survey of Youth (N=2,985) and their children born during 1986–2000 (N=4,683). Outcome variables include utilization of prenatal and postnatal care, use of alcohol and tobacco during pregnancy, term birth, birthweight, and breast-feeding status. We examine the health effects of both household income and EITC payment size using multivariable linear regressions. We employ instrumental variables analysis to estimate the causal effect of income on perinatal health, using EITC payment size as an instrument for household income. Results We find that household income and EITC payment size are associated with improvements in several indicators of perinatal health. Instrumental variables analysis, however, does not reveal a causal association between household income and these health measures. Conclusions Our findings suggest that associations between income and perinatal health may be confounded by unobserved characteristics, but that EITC income improves perinatal health. Future studies should continue to explore the impacts of economic interventions on perinatal health outcomes, and investigate how different forms of income transfers may have different impacts.

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Section: Methodsmentioning

confidence: 99%

Poverty, Pregnancy, and Birth Outcomes: A Study of the Earned Income Tax Credit

Hamad

Rehkopf

2015

Paediatric Perinatal Epid

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“…1 Apart from Chetty [2008], using variations in severance payments, and also LaLumia [2013], using variations in the timing of EITC refunds, there has been very few attempts to empirically estimate the magnitude of liquidity effects of social insurance programs.…”

Section: Assessing the Welfare Effects Of Unemployment Benefits Usingmentioning

confidence: 99%

Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

Landais

2015

American Economic Journal: Economic Policy

131

123

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I show how, in the tradition of the dynamic labor supply literature, one can identify the moral hazard effects and liquidity effects of unemployment insurance (UI) using variations along the time profile of unemployment benefits. I use this strategy to investigate the anatomy of labor supply responses to UI. I identify the effect of benefit level and potential duration in the regression kink design using kinks in the schedule of benefits in the US. My results suggest that the response of search effort to UI benefits is driven as much by liquidity effects as by moral hazard effects. (JEL D82, J22, J65)

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“…On the demand side, as opposed to self‐reporting systems (such as the United States and Canada), German taxes are calculated by the fiscal authorities—the taxpayer declares her taxable earnings and deductions but does not calculate the taxable income or the tax payment. In addition, many low‐income filers with children in the United States receive a refund due to the earned income tax credit (EITC) (LaLumia ) and often pay for tax preparation (Blumenthal, Erard, and Ho ) to ensure that they receive this credit. Germany, on the other hand, does not have an EITC because child allowances and other transfer payments are organized and paid in a manner that is nearly independent of the tax system.…”

Section: Institutional Backgroundmentioning

confidence: 99%

The Effect of Tax Preparation Expenses for Employees: Evidence from Germany

Blaufus

Hechtner

Möhlmann

2016

Contemporary Accting Res

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Using a panel of German income tax accounting data from taxpayers with no business income (employees), we find a negative relationship between tax preparation expenses and tax liabilities. However, preparation expenses are shown to exceed estimated tax savings. Specifically, one additional Euro spent on preparation yields an estimated tax savings of 72 cents in an OLS regression and 24 cents in a fixed effects regression. In addition, we observe substantial heterogeneity in tax savings among income groups, but even if we account for long-term tax savings, tax liability reductions exceed tax preparation expenses only for the highest income quintile. In all other income quintiles, average preparation expenses exceed the estimated tax and time savings. Based on these results, we also examine whether other specific benefits affect an individual's decision to purchase tax preparation services, and the results indicate the importance of the benefits of coping with complexity and reduced uncertainty. Overall, our findings illustrate that the current tax compliance process violates at least two of Adam Smith's principles of taxation, taxes are neither certain nor fair.L'incidence des frais de pr eparation des d eclarations fiscales sur les salari es : donn ees allemandes R ESUM E A partir d'un ensemble de donn ees allemandes relatives a la comptabilisation de l'impôt sur le revenu de contribuables salari es (ne recevant pas de revenu d'entreprise), les auteurs notent l'existence d'une relation n egative entre les frais de pr eparation des d eclarations fiscales et les obligations fiscales. Ils constatent toutefois que les frais de pr eparation exc edent les economies fiscales estim ees. Plus pr ecis ement, un euro suppl ementaire d evolu a la pr eparation des d eclarations fiscales produit une economie fiscale estimative de 72 cents, selon une r egression des MCO, et de 24 cents, selon une r egression a effets fixes. De plus, les auteurs observent une h et erog en eit e importante des economies fiscales entre les tranches de revenu, mais même lorsqu'ils tiennent compte des economies fiscales a long terme, les r eductions des impôts a payer exc edent les frais de pr eparation des d eclarations seulement pour le quintile de revenu sup erieur. Dans tous les autres quintiles de revenu, les frais de pr eparation moyens exc edent les economies estimatives d'impôt et de temps.

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The EITC, Tax Refunds, and Unemployment Spells

Cited by 45 publications

References 57 publications

Poverty, Pregnancy, and Birth Outcomes: A Study of the Earned Income Tax Credit

Poverty, Pregnancy, and Birth Outcomes: A Study of the Earned Income Tax Credit

Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

The Effect of Tax Preparation Expenses for Employees: Evidence from Germany

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