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How Expanding EITC Will Benefit 1.5 Million Low-Income Older Workers

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Abstract

A popular cash transfer program credited with lifting millions out of poverty, the Earned Income Tax Credit (EITC) also reduces wages for non-college educated workers, particularly older workers. Meanwhile, eligibility rules have long prevented most older workers from receiving EITC benefits at the same rate as their younger counterparts. Expanding EITC benefits permanently would offset some of these lost earnings and help stabilize older workers’ earnings. In 2021, Congress enacted a temporary EITC expansion—and our research shows that a permanently expanded EITC would benefit millions of older low-income workers.

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  • Teresa Ghilarducci & Aida Farmand & Bridget Fisher & Siavash Radpour, 2021. "How Expanding EITC Will Benefit 1.5 Million Low-Income Older Workers," SCEPA policy note series. 2021-02, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepapn:2021-02
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    1. Jesse Rothstein, 2010. "Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 177-208, February.
    2. Aida Farmand & Owen Davis, 2021. "Who Does the Earned Income Tax Credit Benefit? A Monopsony View," SCEPA working paper series. 2021-02, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
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    More about this item

    Keywords

    Covid-19; Earned Income Tax Credit; EITC; low-income; Workers; Jobs; Unemployment; Risk; Older workers; retirement income; retirement; retirement savings;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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