Employment Effects of the Earned Income Tax Credit: Taking the Long View

49 Pages Posted: 2 Nov 2020 Last revised: 13 Feb 2021

Date Written: October 2020

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.

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Suggested Citation

Schanzenbach, Diane Whitmore and Strain, Michael, Employment Effects of the Earned Income Tax Credit: Taking the Long View (October 2020). NBER Working Paper No. w28041, Available at SSRN: https://ssrn.com/abstract=3723278

Diane Whitmore Schanzenbach (Contact Author)

Northwestern University

2001 Sheridan Road
Evanston, IL 60208
United States

Michael Strain

American Enterprise Institute ( email )

1789 Massachusetts Ave NW
Washington, DC 20036
United States

HOME PAGE: http://sites.google.com/site/mrstrain/

IZA ( email )

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