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Labor Supply Effects of the Earned Income Tax Credit: Evidence from Wisconsin's Supplemental Benefit for Families with Three Children

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  • Cancian, Maria
  • Levinson, Arik

Abstract

We examine the effect of the Earned Income Tax Credit (EITC) on labor supply, comparing outcomes in Wisconsin, which supplements the federal EITC for families with three children, to outcomes in states that do not supplement the federal EITC. Relative to previous studies, our cross–state comparison examines a larger difference in EITC subsidy rates, more similar treatment and control groups, and a policy that has been in place longer. Whereas most previous research has found significant effects of the EITC on labor force participation, we find no effect

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Bibliographic Info

Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 59 (2006)
Issue (Month): 4 (December)
Pages: 781-800

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Handle: RePEc:ntj:journl:v:59:y:2006:i:4:p:781-800

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  1. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, The Earned Income Tax Credit, And The Labor Supply Of Single Mothers," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(3), pages 1063-1114, August.
  2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  3. Nada Eissa & Hilary Williamson Hoynes, 2000. "The Earned Income Tax Credit and the Labor Supply of Married Couples," Public Economics, EconWPA 9912001, EconWPA.
  4. Stacy Dickert & Scott Houser & John Karl Scholz, 1995. "The Earned Income Tax Credit and Transfer Programs: A Study of Labor Market and Program Participation," NBER Chapters, National Bureau of Economic Research, Inc, in: Tax Policy and the Economy, Volume 9, pages 1-50 National Bureau of Economic Research, Inc.
  5. Scholz, John Karl, 1994. "The Earned Income Credit: Participation, Compliance, and Antipoverty Effectiveness," National Tax Journal, National Tax Association, National Tax Association, vol. 47(1), pages 63-87, March.
  6. J. K. Scholz, . "The earned income tax credit: Participation, compliance, and antipoverty effectiveness," Institute for Research on Poverty Discussion Papers, University of Wisconsin Institute for Research on Poverty 1020-93, University of Wisconsin Institute for Research on Poverty.
  7. Nada Eissa & Jeffrey B. Liebman, 1995. "Labor Supply Response to the Earned Income Tax Credit," NBER Working Papers 5158, National Bureau of Economic Research, Inc.
  8. Ellwood, David T., 2000. "The Impact of the Earned Income Tax Credit and Social Policy Reforms on Work, Marriage, and Living Arrangements," National Tax Journal, National Tax Association, National Tax Association, vol. 53(n. 4), pages 1063-1106, December.
  9. David Neumark & William Wascher, 2000. "Using the EITC to Increase Family Earnings: New Evidence and a Comparison with the Minimum Wage," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 134, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Meyer, Bruce D. & Rosenbaum, Dan T., 2000. "Making Single Mothers Work: Recent Tax and Welfare Policy and its Effects," National Tax Journal, National Tax Association, National Tax Association, vol. 53(n. 4), pages 1027-62, December.
  11. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, National Bureau of Economic Research, Inc, in: Means-Tested Transfer Programs in the United States, pages 141-198 National Bureau of Economic Research, Inc.
  12. Bruce D. Meyer & Dan T. Rosenbaum, 2000. "Making Single Mothers Work: Recent Tax and Welfare Policy and its Effects," NBER Working Papers 7491, National Bureau of Economic Research, Inc.
  13. Jeffrey Grogger, 2003. "The Effects of Time Limits, the EITC, and Other Policy Changes on Welfare Use, Work, and Income among Female-Headed Families," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 394-408, May.
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Cited by:
  1. Pedro Gomis-Porqueras & Oscar Mitnik & Adrian Peralta-Alva & Maximilian D. Schmeiser, 2011. "The Effects of Female Labor Force Participation on Obesity," Working Papers, University of Miami, Department of Economics 2011-16, University of Miami, Department of Economics.
  2. Kartik Athreya & Devin Reilly & Nicole B. Simpson, 2010. "Earned income tax credit recipients: income, marginal tax rates, wealth, and credit constraints," Economic Quarterly, Federal Reserve Bank of Richmond, Federal Reserve Bank of Richmond, issue 3Q, pages 229-258.
  3. David Neumark & William Wascher, 2011. "Does a Higher Minimum Wage Enhance the Effectiveness of the Earned Income Tax Credit?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 64(4), pages 712-746, July.
  4. David Neumark, 2011. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," NBER Working Papers 16866, National Bureau of Economic Research, Inc.
  5. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, . "Nonmarket Household Time and the Cost of Children," Discussion Papers 08/07, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  6. Averett, Susan L. & Wang, Yang, 2012. "The Effects of EITC Payment Expansion on Maternal Smoking," IZA Discussion Papers 6680, Institute for the Study of Labor (IZA).
  7. Chris Herbst, 2010. "The labor supply effects of child care costs and wages in the presence of subsidies and the earned income tax credit," Review of Economics of the Household, Springer, Springer, vol. 8(2), pages 199-230, June.
  8. David Neumark, 2009. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity," NBER Working Papers 14807, National Bureau of Economic Research, Inc.
  9. Tiefenthaler, Jill & Simpson, Nicole & Hyde, Jameson, 2008. "The Impact of the Earned Income Tax Credit on Economic Well-being: A Comparison across Household Types," Working Papers, Department of Economics, Colgate University 2008-02, Department of Economics, Colgate University.
  10. Samara Potter Gunter, 2010. "State Earned Income Tax Credits and Participation in Regular and Informal Work," Working Papers, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing. 1298, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing..
  11. Gunter, Samara, 2013. "State Earned Income Tax Credits And Participation In Regular And Informal Work," National Tax Journal, National Tax Association, National Tax Association, vol. 66(1), pages 33-62, March.

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