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How do EITC recipients spend their refunds?


  • Andrew Goodman-Bacon
  • Leslie McGranahan


The authors determine what items are purchased using the earned income tax credit (EITC)—one of the largest sources of public support for lower-income working families in the U.S. They find that recipient households’ EITC payments are used primarily for vehicle purchases and transportation spending, both of which are crucial to job access and consistent with the EITC’s prowork goals.

Suggested Citation

  • Andrew Goodman-Bacon & Leslie McGranahan, 2008. "How do EITC recipients spend their refunds?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 17-32.
  • Handle: RePEc:fip:fedhep:y:2008:i:qii:p:17-32:n:v.32no.2

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    References listed on IDEAS

    1. 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.
    2. Barrow, Lisa & McGranahan, Leslie, 2000. "The Effects of the Earned Income Credit on the Seasonality of Household Expenditures," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1211-44, December.
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    Cited by:

    1. Lauren E. Jones & Kevin S. Milligan & Mark Stabile, 2015. "Child Cash Benefits and Family Expenditures: Evidence from the National Child Benefit," NBER Working Papers 21101, National Bureau of Economic Research, Inc.
    2. Gordon B. Dahl & Lance Lochner, 2012. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," American Economic Review, American Economic Association, vol. 102(5), pages 1927-1956, August.
    3. Austin Nichols & Jesse Rothstein, 2015. "The Earned Income Tax Credit," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, volume 1, pages 137-218 National Bureau of Economic Research, Inc.
    4. Katie Fitzpatrick, 2015. "Does “Banking the Unbanked” Help Families to Save? Evidence from the United Kingdom," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 223-249, March.
    5. Gaitz, Jason & Schurer, Stefanie, 2017. "Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation," IZA Discussion Papers 10525, Institute for the Study of Labor (IZA).
    6. Dayanand S. Manoli & Nicholas Turner, 2014. "Nudges and Learning: Evidence from Informational Interventions for Low-Income Taxpayers," NBER Working Papers 20718, National Bureau of Economic Research, Inc.
    7. McGranahan, Leslie & Schanzenbach, Diane Whitmore, 2013. "The Earned Income Tax Credit and Food Consumption Patterns," Working Paper Series WP-2013-14, Federal Reserve Bank of Chicago.
    8. Dutko, Paula & Ver Ploeg, Michele & Farrigan, Tracey L., 2012. "Retail Wastelands: Characteristics and Influential Factors of Food Deserts," 2012 AAEA/EAAE Food Environment Symposium, May 30-31, Boston, MA 123201, Agricultural and Applied Economics Association.


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