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Stepping Stone or Dead End? The Effect of the EITC on Earnings Growth

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Author Info

  • Dahl, Molly

    ()
    (Congressional Budget Office)

  • DeLeire, Thomas

    ()
    (Georgetown University)

  • Schwabish, Jonathan

    ()
    (Congressional Budget Office)

Abstract

While many studies have found that the EITC increases the employment rates of single mothers, no study to date has examined whether the jobs taken by single mothers as a result of the EITC incentives are "dead-end" jobs or jobs that have the potential for earnings growth. Using a panel of administrative earnings data linked to nationally representative survey data, we find no evidence that the EITC expansions between 1994 and 1996 induced single mothers to take "dead-end" jobs. If anything, the increase in earnings growth during the mid-to-late 1990s for single mothers who were particularly affected by the EITC expansion was higher than it was for other similar women. The EITC encourages work among single mothers, and that work continues to pay off through future increases in earnings.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4146.

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Length: 33 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4146

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Keywords: earned income tax credit; earnings; single mothers;

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References

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  1. 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.
  2. Peter R. Mueser & Carolyn J. Heinrich & Kenneth Troske, 2003. "Welfare to Temporary Work: Implications for Labor Market Outcomes," Working Papers 0308, Department of Economics, University of Missouri.
  3. David Autor & Susan Houseman, 2009. "Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from 'Work First'," Upjohn Working Papers and Journal Articles 05-124, W.E. Upjohn Institute for Employment Research.
  4. 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, vol. 116(3), pages 1063-1114, August.
  5. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
  6. V. Joseph Hotz & John Karl Scholz, 2001. "The Earned Income Tax Credit," NBER Working Papers 8078, National Bureau of Economic Research, Inc.
  7. 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, vol. 53(n. 4), pages 1063-1106, December.
  8. David Autor & Susan Houseman, 2005. "Temporary Agency Employment as a Way out of Poverty?," Upjohn Working Papers and Journal Articles 05-123, W.E. Upjohn Institute for Employment Research.
  9. Carolyn J. Heinrich, 2005. "Temporary Employment Experiences of Women on Welfare," Journal of Labor Research, Transaction Publishers, vol. 26(2), pages 335-350, January.
  10. Eissa, Nada & Liebman, Jeffrey B, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 605-37, May.
  11. 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, vol. 53(n. 4), pages 1027-62, December.
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Cited by:
  1. H. Shaefer & Xiaoqing Song & Trina Williams Shanks, 2013. "Do single mothers in the United States use the Earned Income Tax Credit to reduce unsecured debt?," Review of Economics of the Household, Springer, vol. 11(4), pages 659-680, December.

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