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Earned income tax credit and crime

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  • Otto Lenhart

Abstract

This study examines the relationship between earned income tax credit (EITC) laws and crime. Using data from 1999–2017, a period with 73 state EITC changes, I evaluate the effects of state‐level EITCs on violent and property crime. Estimating difference‐in‐differences models, I find that higher EITCs are associated with significant reductions in violent crime, while not affecting property crimes. Introducing high state EITC is associated with a 10.0% reduction in violent crimes, which corresponds to 40 fewer crimes per 100,000 individuals. Event study estimates confirm the negative association between EITC generosity and violent crime.

Suggested Citation

  • Otto Lenhart, 2021. "Earned income tax credit and crime," Contemporary Economic Policy, Western Economic Association International, vol. 39(3), pages 589-607, July.
  • Handle: RePEc:bla:coecpo:v:39:y:2021:i:3:p:589-607
    DOI: 10.1111/coep.12522
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