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Earned income tax credit recipients: income, marginal tax rates, wealth, and credit constraints

  • Kartik Athreya
  • Devin Reilly
  • Nicole B. Simpson

The Earned Income Tax Credit (EITC) has evolved into the largest anti-poverty program in the United States by providing tax credits for low and moderate income working families. In this paper, we describe the characteristics of EITC recipients at various ages using Current Population Survey data. In addition, we discuss the relevance of the EITC in affecting marginal income tax rates in the United States and discuss the effects of the EITC on household labor supply decisions. Lastly, using data from the Survey of Consumer Finances, we estimate wealth distributions for EITC recipients and analyze the extent to which EITC recipients are credit constrained.

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File URL: http://www.richmondfed.org/publications/research/economic_quarterly/2010/q3/pdf/athreya.pdf
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Article provided by Federal Reserve Bank of Richmond in its journal Economic Quarterly.

Volume (Year): (2010)
Issue (Month): 3Q ()
Pages: 229-258

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Handle: RePEc:fip:fedreq:y:2010:i:3q:p:229-258:n:v.96no.3
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  1. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, vol. 84(1), pages 1-32, April.
  2. Michael P. Keane & Robert Moffitt, 1995. "A structural model of multiple welfare program participation and labor supply," Working Papers 557, Federal Reserve Bank of Minneapolis.
  3. Josep Pijoan-Mas, 2003. "Precautionary Savings Or Working Longer Hours?," Working Papers wp2003_0311, CEMFI.
  4. David Neumark & William Wascher, 2000. "Using the EITC to Help Poor Families: New Evidence and a Comparision with the Minimum Wage," NBER Working Papers 7599, National Bureau of Economic Research, Inc.
  5. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244, March.
  6. Nicole Simpson & Jill Tiefenthaler & Jameson Hyde, 2010. "The Impact of the Earned Income Tax Credit on Economic Well-Being: A Comparison Across Household Types," Population Research and Policy Review, Springer, vol. 29(6), pages 843-864, December.
  7. Jennifer L. Romich & Thomas Weisner, 2000. "How Families View and Use the EITC: Advanced Payment versus Lump-sum Delivery," JCPR Working Papers 138, Northwestern University/University of Chicago Joint Center for Poverty Research.
  8. Jeffrey Grogger, 2003. "Welfare Transitions in the 1990s: The Economy, Welfare Policy, and the EITC," NBER Working Papers 9472, National Bureau of Economic Research, Inc.
  9. Dennis J. Ventry, 2000. "The Collision of Tax and Welfare Politics: The Political History of the Earned Income Tax Credit, 1969 - 1999," JCPR Working Papers 149, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Romich, Jennifer L. & Weisner, Thomas, 2000. "How Families View and Use the EITC: Advance Payment versus Lump Sum Delivery," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1245-66, December.
  11. Nicole Simpson & Devin Reilly & Kartik Athreya, 2010. "The Earned Income Tax Credit: Insurance Without Disincentives?," 2010 Meeting Papers 1103, Society for Economic Dynamics.
  12. Maria Cancian & Arik Levinson, 2005. "Labor Supply Effects of the Earned Income Tax Credit: Evidence from Wisconsin Supplemental Benefit for Families with Three Children," NBER Working Papers 11454, National Bureau of Economic Research, Inc.
  13. Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 219-34, February.
  14. 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.
  15. Saul D. Hoffman & Laurence S. Seidman, 1990. "The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number eitc, March.
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